1. APAC Company XXIII Limited 2. Kotak Performing RE Credit Strategy Fund I — Combination C-2024/05/1141

Notice under Section 6(2) of the Competition Act, 2002 given by APAC Company XXIII Limited and Kotak Performing RE Credit Strategy Fund I

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 3 May 2024, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), given by APAC Company XXIII Limited (APAC XXIII/ Acquirer 1) and Kotak Performing RE Credit Strategy Fund I (Kotak Fund/ Acquirer 2) [Acquirer 1 and Acquirer 2 are collectively referred to as the Acquirers].

2. The Notice was filed pursuant to the letter agreement dated 12 April 2024 (Letter Agreement) between the Acquirers and Mr. Arvind Kathpalia in relation to the nomination of Mr. Arvind Kathpalia as the director on the board of Embassy Office Parks Management Services Private Limited (Target) [The Acquirers and the Target are collectively referred to as the ‘Parties’].

3. The proposed combination relates to the Acquirers exercising their right pursuant to the recent amendments to the Securities Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014, as amended (SEBI REIT Regulations) to collectively nominate a director on the board of directors of the Target, the manager of Embassy REIT (Proposed Combination).

4. In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, vide letter dated 17 May 2024, certain information and clarifications were sought from the Acquirers. The Acquirers submitted response vide communication dated 20 May 2024. The Acquirers submitted additional voluntary submission vide communication dated 23 May 2024.

5. Acquirer 1 is owned and controlled by funds ultimately managed by Bain Capital Credit Member, LLC, Bain Capital Credit Member II, LLC, and/or Bain Capital Credit Member III, LLC (collectively referred to as ‘BCC’). As per information provided in the Notice, BCC is a global credit specialist, and it invests, through its family of funds, in credit-related strategies, including leveraged loans, high-yield bonds, direct lending, bespoke capital solutions, structured equity, hard assets, and distressed securities.

6. Acquirer 2 is an alternative investment fund (AIF) registered with the SEBI under the SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations), and is managed by Kotak Alternate Asset Managers Limited (erstwhile Kotak Investment Advisors Limited) (KAAML). KAAML also operates and manages various AIFs in India. KAAML, the funds it manages, and its portfolio companies are collectively referred to as (Acquirer 2 Group). Acquirer 2 primarily undertakes investments in real estate projects in various sectors such as commercial and mixed-use projects. KAAML is a part of the Kotak Mahindra Group, which is engaged inter alia in the banking and financial services sector, offering a wide range of financial services such as banking services, stock broking, mutual funds, general insurance, loans, asset management products and services, etc.

7. The Target is the manager of Embassy REIT and it manages the day-to-day operations of the real estate assets and other investments held by Embassy REIT in accordance with the SEBI REIT Regulations. Embassy REIT was settled as an irrevocable trust under the provisions of the Indian Trusts Act, 1882, with the principal objective to own, operate, and invest in rent and/ or income-generating real estate and other related assets in India. It owns and operates a portfolio of infrastructure such as office parks and city-center office building(s) in the cities of Bengaluru, Mumbai Metropolitan Region (MMR), Pune, National Capital Region of Delhi, and a business park in Chennai (in the process of acquisition). As per the information provided, its portfolio also comprises strategic amenities, including hotels and a 100-megawatt solar park.

8. It has been submitted that there are no horizontal, vertical, or complementary overlaps between Acquirer 1 (including its affiliates, direct or indirect) and Target, its subsidiaries, and affiliates (including Embassy REIT) in India.

9. With regard to the Acquirer 2 Group, it has been submitted that both the Acquirer 2 Group through its affiliates and Embassy REIT are engaged in the development of commercial real estate for use as traditional office spaces in the cities of Bengaluru, Delhi, MMR, Pune, and Chennai. Regarding vertical linkages/overlaps, the Commission observed that the Acquirer 2 Group is engaged in the upstream segment for the development of commercial real estate for use as traditional office spaces in the cities of Bengaluru and Delhi NCR whereas Embassy REIT as well as Acquirer 2 Group are engaged in the downstream segment of leasing of commercial real estate for use as traditional office spaces.

10. It has been submitted here that there are no other horizontal, vertical, or complementary overlaps between the activities of the Kotak Mahindra Group (including its affiliates) and Embassy REIT.

11. For the reasons given in the ensuing paragraphs, the Proposed Combination is not likely to result in appreciable adverse effect on competition (AAEC) irrespective of the manner in which the relevant market(s) are delineated for the aforesaid activity segments and accordingly, the Commission decides to leave precise delineation of relevant market open.

12. The Commission noted that the combined market shares of the Parties in all the overlapping segments/sub-segments are minuscule. With regards to the vertical linkages/overlaps, the Commission noted that the relationship between Parties is not such which can cause competition concern in any segment/sub-segment.

13. Considering the material 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 AAEC in India, and therefore, the Commission hereby approves the Proposed Combination under Section 31(1) of the Act.

14. This order may be revoked if, at any time, the information provided by Acquirers is found to be incorrect.

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

16. The Secretary is directed to communicate this order to Acquirers.