Violicina Limited

COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/03/1126

21st May 2024

Notice under Section 6(2) of the Competition Act, 2002 filed by Violicina Limited.

CORAM:

Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Ms. Sweta Kakkad Member

Mr. Deepak Anurag Member

Order under Section 31(1) of the Competition Act, 2002

1. On $28^{\text{th}}$ March 2024, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by Violicina Limited (Violicina/Acquirer) for the proposed acquisition of stake in Svatantra Microfin Private Limited (SMPL) and rights in Svatantra Micro Housing Finance Corporation Limited (SMHFCL) (SMPL and SMHFCL are collectively referred to as 'Target Entities') [Hereinafter, the Acquirer and Target Entities are collectively referred to as 'Parties'].

2. The notice has been filed pursuant to the following agreements: (a) Securities Subscription and Purchase Agreement between SMPL, IGH Holdings Private Limited (IGH), Svatantra Holdings Private Limited (SHPL), Violicina, and Multiples$^1$, executed on $4^{\text{th}}$ March 2024 (SSPA), and (b) Shareholders' Agreement between SMPL, IGH, SHPL, Violicina, Multiples, and Ananyashree Birla, executed on $4^{\text{th}}$ March 2024.

3. The proposed combination envisages the acquisition of 31.73% shareholding (on a fully diluted basis) in SMPL by Violicina, by way of a combination of (a) primary subscription of equity shares and (b) purchase of compulsorily convertible preference shares from IGH (SMPL Acquisition). Further, it envisages the acquisition of certain rights in SMHFCL on and from the date of closing of the Proposed Combination (SMHFCL Rights) [SMPL Acquisition and SMHFCL Rights are collectively referred to as the Proposed Combination].

4. Apart from the Proposed Combination i.e., acquisition of shares in SMPL and acquisition of certain rights in SMHFCL, no other transaction is included within the scope of the approval by the Commission. Any other transactions disclosed in the notice are separate, unconnected, and independent of the Proposed Combination and are not being assessed and approved by the Commission, in any manner.

5. In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, the Commission, vide communications dated $12^{\text{th}}$ April 2024, $23^{\text{rd}}$ April 2024 and $09^{\text{th}}$ May 2024 sought certain information(s)/ clarification(s), inter alia, relating to the activities of the Parties and the responses to the same were received on $18^{\text{th}}$ April 2024, $26^{\text{th}}$ April 2024 and $13^{\text{th}}$ May 2024.

6. The Acquirer is a special purpose vehicle incorporated in Cyprus. It is the wholly owned subsidiary of Violicina Midco. Violicina Midco is in turn the wholly owned subsidiary of AI Violicina (Guernsey) Limited, which is collectively controlled by the Advent International GPE X funds, which are ultimately managed by Advent International, L.P.

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$^1$ Multiples Private Equity Fund III, Multiples Private Equity Fund IV, and Multiples Private Equity Gift Fund IV (collectively, Multiples).

(Advent). It is an investment holding company, and apart from this, there are no other business activities that are carried out by it in India.

7. Advent is a global private equity investor. The firm focuses on investments in five core sectors, including business and financial services; health care; industrial; retail, consumer, and leisure; and technology. In India, Advent has been investing since 2007 and has invested in sectors such as business and financial services, retail, consumer and leisure, healthcare, industrial and technology. It has an indirect subsidiary in India, Advent PE Advisors Private Limited.

8. SMPL is the ultimate holding company of the "SMPL group". It is a registered Non-Deposit Taking Systemically Important NBFC-MFI (Middle Layer). SHPL holds 15.9% equity shareholding in SMPL. SMPL along with Chaitanya India Fin Credit Private Limited (CIFCPL) (its wholly owned subsidiary) is engaged in the business of providing microfinance loans and personal loans to the customers in rural/semi urban areas. SMPL and CIFCPL also distribute credit-linked life insurance as an ancillary business activity to the loan itself.

9. SMHFCL is a registered Non-Deposit Taking housing finance company NBFC-HFC (Middle Layer). SHPL is the holding company of SMHFCL and holds 100% in SMHFCL. It is in the business of providing secured housing loans to the financially excluded rural and urban low-income families, loans to individuals against property and loans to corporates/ institutions for construction/ real estate projects. SMHFCL does not have any subsidiary/downstream affiliates in India.

10. It is submitted that the Acquirer through certain portfolio entities of Advent exhibit horizontal overlaps with Target Entities in the market for (i) Loans and Lending services, (ii) Retail loans, (iii) Home loans, (iv) Loans to individuals against property, (v) Personal loans (vi) Microfinance loans, (vii) Wholesale loans and (viii) Loans institutions for construction/ real estate projects.

11. Based on the above, the Parties have submitted that the relevant markets may be defined as the market for provision of loans and lending services in India (Broad Relevant Market), which may be further segmented into: (i) the market for provision of retail loans in India (Narrow Market I) and (ii) the market for provision of wholesale loans in India (Narrow Market 2). The Narrow Market I may further be segmented as: (a) the market for provision of Home Loans in India (Narrower Market 1); (b) the market for provision of microfinance Loans in India (Narrower Market 2); (c) the market for provision for loans against properties in India (Narrower Market 3) and (d) the market for provision of personal loans in India. (Narrower Market 4). The Narrow Market II may further be segmented as: (a) the market for provision of construction finance (including project finance) or real estate loans (Narrower Market: 5) [The Broad Market, the Narrow Market 1, Narrow Market 2, Narrower Market 1, Narrower Market 2, Narrower Market 3, Narrower Market 4, Narrower Market 5 are collectively referred to as the 'Relevant Markets'].

12. The Commission decides to leave precise delineation of the relevant market open, as it was observed that because of the reasons stated below, the Proposed Combination is not likely to result in appreciable adverse effect on competition irrespective of the manner in which the relevant market is delineated.

13. Based on the submissions of the Parties, it is noted that the combined market shares of Parties in the Relevant Markets are in the range of [0-5] % in terms of value. Further, there are other players present such as State Bank of India (SBI), HDFC Bank, ICICI Bank (ICICI), Axis Bank (Axis) and Punjab National Bank (PNB) in the Broad Market, HDFC Bank, ICICI, SBI, Axis and Bank of Baroda (BoB) in the Narrow Market 1, HDFC Bank, SBI, ICICI, BoB and PNB in the Narrow Market 2, ICICI, SBI, Axis, BoB, and HDFC Bank in the Narrower Market 1, IndusInd Bank, Credit Access, Ujjivan SFB, IIFL Samasta, and Asirvad in the Narrower Market 2, HDFC Bank, IDFC First Bank, IndusInd Bank, Axis and ICICI in the Narrower Market 3, SBI, HDFC Bank, PNB, ICICI and Axis in the Narrower Market 4 and HDFC Bank, ICICI, IDFC First Bank, SBI and Axis in the Narrower Market 5, who will continue to pose competitive constraints to the Parties post the Proposed Combination.

14. Considering the material on record, including the details provided in the notice and the assessment of the Proposed Combination based on the factors stated in subsection (4) Section 20 of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

15. This order may stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

16. The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

17. The Secretary is directed to communicate to the Acquirer accordingly.