Zonnebaars Netherlands B.V.

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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2023/08/1050 3rd October 2023 Notice under Section 6(2) of the Competition Act, 2002 jointly given by Zonnebaars Netherlands B.V., Indira IVF Hospital Private Limited, Spaceway Wellness Private Limited, Dr. Kshitiz Murdia, Dr. Ajay Murdia and Dr. Nitiz Murdia CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Order under Section 31(1) of the Competition Act, 2002 1. On 18th August 2023, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), jointly given by Zonnebaars Netherlands B.V. (Zonnebaars/Acquirer), Indira IVF Hospital Private Limited (Indira IVF) and Spaceway Wellness Private Limited (Spaceway). The Notice was given pursuant to inter alia execution of a Share Purchase Agreement between Indira IVF, Murdia Family1, TA Asia Pacific Acquisitions Limited (TA) and Zonnebaars on 28th July 2023 (SPA); and a Shareholders’ Agreement between Murdia Family and Spaceway (collectively referred to as Promoter Group), Indira IVF, TA and Zonnebaars on 28thJuly 2023 (SHA). 2. The Commission, vide its communication dated 29th August 2023 (Defect Letter), 1Dr. Kshitiz Murdia, Dr. Ajay Murdia and Dr. Nitiz Murdia are collectively referred to as the Murdia Family. Combination Registration No. C-2023/08/1050 Page 2 of 6 issued under Regulation 14(3) of the Competition Commission of India (Procedure in regard to transaction of business relating to combinations) Regulations, 2011, required the notifying party(ies) to remove defects from the Notice and furnish certain information relevant for the purpose of assessment of the proposed combination. The notifying party(ies) furnished their response vide submissions dated 12thAugust 2023, 18th September 2023 and 20th September 2023. Initially, Murdia Family was not the notifying party to the Notice. However, in response to the Defect Letter, it became notifying party by furnishing relevant documents. 3. The Proposed Combination envisages an acquisition of up to 65.8% of the equity share capital of Indira IVF by Zonnebaars, on a fully diluted basis (Proposed Combination). The Proposed Combination can be implemented by way of Main Structure or the Fall-Back Structure, as envisaged under the SHA. 4. If the Proposed Combination is implemented by way of the Main Structure, Zonnebaars will hold 60% of Indira IVF on a fully diluted basis. However, if the Proposed Combination is implemented by way of the Fall-Back Structure, Zonnebaars will hold up to 65.8% equity share capital of Indira IVF on a fully diluted basis. 5. In the Main Structure, the Proposed Combination will be given effect by way of the following interconnected steps (Main Structure): - Step I: Zonnebaars will acquire 46.4% of the equity share capital of Indira IVF, on a fully diluted basis from Dr. Kshitiz Murdia, Dr. Nitiz Murdia and TA; - Step II: Spaceway will amalgamate with and into Indira IVF and will cease to exist, with Indira IVF being the surviving entity (Proposed Amalgamation). As a result of the Proposed Amalgamation, Zonnebaars will hold 52.1% of the equity share capital of Indira IVF (i.e., the entity surviving after the Proposed Amalgamation); and Combination Registration No. C-2023/08/1050 Page 3 of 6 - Step III: Post the Proposed Amalgamation, Zonnebaars will acquire an additional 7.9% of the equity share capital of Indira IVF on a fully diluted basis from TA. 6. After the Step 1 of the Main Structure, in the event, the Proposed Amalgamation does not take place within specified time period, Fall-Back Structure will be implemented. As per Fall-Back Structure, Zonnebaars will acquire certain additional shareholding of Indira IVF from Spaceway. Thereafter, the Murdia Family will acquire the CCPS held by Indira IVF in Spaceway and convert these CCPS into equity share capital of Spaceway. Spaceway will then be liquidated in accordance with applicable law such that the shares held by Spaceway in Indira IVF will be distributed amongst Murdia Family and TA. Thereafter, the Murdia Family and/or Zonnebaars, as may be agreed, shall acquire shareholding of Indira IVF from TA, and TA will cease to be a shareholder of Indira IVF. 7. It has been further submitted that the parties agreed on certain terms under the SHA to ensure that a debt availed by Spaceway is fully serviced until the completion of the Proposed Amalgamation or implementation of the Fall-Back Structure, as applicable (Debt Service Period). In certain situation, additional CCPS will be issued on a partly paid-up basis to Indira IVF to continue servicing the obligations of Spaceway. 8. Zonnebaars is ultimately owned by entities forming the investment fund BPEA Private Equity Fund VIII (BPEA Fund VIII). BPEA Fund VIII is controlled, managed and advised by entities affiliated with EQT AB. Zonnebaars is part of the EQT group of investment funds, which together with its subsidiaries and funds is a global investment organisation. 9. It has been submitted that services provided by Indira IVF Group is primarily engaged in the provision of fertility and in vitro fertilization (IVF) treatment through its Combination Registration No. C-2023/08/1050 Page 4 of 6 hospitals/centers across India. It also provides certain obstetrics/gynecology (Ob/Gyn) procedures/surgeries to patients as hysteroscopy, dilation and curettage (D&C) etc. It also provides maternity and neonatal care to patients at a few hospitals/centers in India. It also operates pharmacies and diagnostic labs within the centers/hospitals for in-house patients only. 10. Spaceway is one of the promoters of Indira IVF and directly holds 26% of the equity share capital of Indira IVF, on a fully diluted basis. Spaceway is not engaged in any business activity on its own. Spaceway has entered into a Joint Service Agreement with a third-party whereby Spaceway provides certain embryologists (doctors), which provide IVF-related services, at two centers in UP and earns a joint healthcare service fee from such arrangement. In case of Fall-Back Structure, Spaceway shall transfer its rights under the Joint Service Agreements to Indira IVF. 11. It has been submitted that there are no overlaps between the Murdia Family vis-à-vis Spaceway, and the Murdia Family vis-à-vis Indira IVF Group in India. This is because apart from Indira IVF Group, Murdia Family does not have any affiliates, as per the Materiality Threshold3, active in the healthcare sector in India which gives rise to overlaps with Indira IVF Group. 12. It has been submitted that the one of the portfolio companies of EQT viz., Asian Institute of Gastroenterology Hospitals (AIG Hospitals) operates 2 hospitals in Hyderabad viz., Somajiguda and Gachibowli. However, it does not provide any IVF treatment. At Somajiguda, Hyderabad, AIG Hospitals provides services only in relation to medical and surgical gastroenterology. At Gachibowli, Hyderabad, AIG Hospitals operates a multi-specialty hospital and provides multiple healthcare services including the Ob/Gyn healthcare services including hysteroscopy. The Indira IVF 3 Direct or indirect shareholding of 10% or more in such entity; or a right or ability to exercise any right (including any advantage of commercial nature with any of the party or its affiliates) that is not available to an ordinary shareholder in such entity; ora right or ability to nominate a director or observer in such entity Combination Registration No. C-2023/08/1050 Page 5 of 6 Group operates IVF healthcare centers in Hyderabad and also provides hysteroscopy service. 13. It has been submitted that Indira IVF is primarily engaged in the provision of fertility and IVF treatment, whereas, AIG Hospitals does not provide any IVF treatment. Overlap between Indira IVF and AIG Hospitals is limited to one of the procedures, viz., Hysteroscopy in Hyderabad. For Hysteroscopy procedure in Hyderabad, combined market share of Indira IVF and AIG Hospitals for FY 2022-23 is insignificant. Further, this procedure sub-segment is characterised by presence of other healthcare service providers with higher market share than the combined market share of Indira IVF and AIG Hospital. In view of the above, this overlap is not likely to raise any competition concern. 14. It has been submitted that one of the portfolio companies of EQT, viz., Recipharm through its subsidiary, viz., Nitin Lifescience Private Limited (Nitin Lifesciences) is engaged in the manufacture and sale of pharmaceutical products in India. Nitin Lifescienes is predominantly a contract development and manufacturing organization (CDMO), i.e., it manufactures pharmaceutical products for pharmaceutical companies that sell them under their own brand names. Nitin Lifesciences also sells limited pharmaceutical products under its own brand name in India. Though, Indira IVF Group does not use any products of Nitin Lifesciences, it is presently using similar pharmaceutical products, based on the same composition/salt, offered by competitors of Nitin Lifesciences while providing treatment to its patients. Therefore, activities of Indira IVF and Nitin Lifesciences exhibit vertical interface. In this regard, it has been submitted that pharmaceutical products manufactured and sold by Nitin Lifesciences are general/generic in nature and can be used/prescribed by hospitals/doctors for treatment of their patients. Further, Nitin Lifesciences has an insignificant revenue. In view of the above, this vertical interface is not likely to raise any foreclosure concern. 15. The Commission decides to leave precise delineation of relevant market open as the Combination Registration No. C-2023/08/1050 Page 6 of 6 Proposed Combination is not likely to raise any competition concern irrespective of the manner in which the relevant market is delineated. 16. Considering the materials on record, including the details provided in the Notice and the assessment of the Proposed Combination based on factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India in any of the relevant market(s), and therefore, the Commission hereby approves the Proposed Combination under Section 31(1) of the Act. 17. This order may be revoked if, at any time, the information provided by the notifying parties is found to be incorrect. 18. The information provided by the parties shall be treated as confidential in terms of and subject to the provisions of Section 57 of the Act. 19. The Secretary is directed to communicate this order to the notifying parties.