AHVF II Holdings Singapore II Pte. Ltd. — Combination C-2022/02/904

Notice under Section 6(2) of the Competition Act, 2002 given by AHVF II Holdings Singapore II Pte. Ltd.

CORAM:

Mr. Ashok Kumar Gupta Chairperson

Ms. Sangeeta Verma Member

Mr. Bhagwant Singh Bishnoi Member

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

1. On 3rd February 2022, the Competition Commission of India (‘Commission’) received a notice under Section 6(2) of the Competition Act, 2002 (‘Act’), given by AHVF II Holdings Singapore II Pte. Ltd. (‘AHVF’/‘Acquirer’). The Notice was filed pursuant to the execution of a Share Subscription Agreement (‘SSA’) and Shareholders’ Agreement (‘SHA’), both dated 31st January 2022 and executed, inter alios, between Hero FinCorp Limited (‘HFL’/‘Target’) and AHVF.

2. The proposed combination envisages the subscription by AHVF of certain compulsorily convertible preference shares (‘CCPS’) to be issued by HFL that convert into approximately 10.24% of the issued and paid-up equity share capital of HFL (on a fully diluted basis) (‘Proposed Combination’).

3. In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to the transaction of Business relating to Combinations) Regulations, 2011 (‘Combination Regulations’), vide letter dated 25th February 2022, certain information and clarifications were sought from the Acquirer. The response was filed on 4th March 2022. Since the response was incomplete, the Acquirer was asked to provide complete information vide the Commission’s letter dated 11th March 2022. The response was filed on 24th March 2022 after seeking extension of time. As the response was still not complete, Acquirer was again asked to provide complete information vide letter dated 29th March 2022. The complete information was filed by the Acquirer on 30th March 2022.

4. AHVF is a private limited company incorporated in Singapore. It is owned by investment funds managed by affiliates of Apollo Management LP (‘Apollo’). Apollo is a limited partnership formed in accordance with the laws of the State of Delaware, U.S.A. Investment funds managed by affiliates of Apollo invest in companies and debt issued by companies involved in various businesses throughout the world.

5. In India, Apollo has a controlling investment in Clix Capital Services Private Limited (‘Clix Capital’). Clix Capital is a non-banking financial company (‘NBFC’) engaged in the business of advancing loans for various commercial and personal needs. Clix Capital has two wholly owned subsidiaries in India – Clix Finance India Private Limited (‘Clix Finance’) and Clix Housing Finance Limited (‘Clix Housing’). Clix Capital’s personal and commercial loans are offered through Clix Finance, whereas its home loans are offered through Clix Housing.

6. Apollo has set up an alternative investment fund, namely, Asia Real Estate II India Opportunity Trust (‘AIF’). AIF has provided loans (through non-convertible debentures) to companies engaged in the development of real estate.

7. The Target, an entity incorporated in India, is part of the Hero group. It is primarily engaged in the business of financing and related financial services. The Target is registered as a systemically important non-deposit taking NBFC with the Reserve Bank of India. It primarily deals in financing retail and corporate customers. On the retail side, HFL deals with the financing of two-wheelers, personal loan, etc. Further, the Target offers various products to its corporate customers, such as bill/invoice discounting, loan against property (‘LAP’), business loans, etc. The Target’s wholly owned subsidiary, Hero Housing Finance Limited (‘HHFL’), is registered with the National Housing Bank and is engaged in the business of providing housing loans. It offers a range of housing loans and loans against property to various segments of society.

8. It is submitted by the Acquirer that Apollo in India is active in the same market as HFL (including HHFL) through Clix Capital (including its subsidiaries) and AIF. The Commission has noted that Clix Capital and HFL exhibit horizontal overlaps in the broad markets for (i) provision of loans/lending services in India and (ii) distribution of insurance products in India. Within the broad market for the provision of loans/lending services, these entities exhibit overlaps in the segments of retail loans and wholesale loans. In the segment of retail loans, these entities exhibit overlaps in the narrower sub-segments of (a) personal loans; (b) home loans; (c) MSME loans; and (d) LAP. Further, in the segment of wholesale loans, these entities exhibit overlaps in the narrower sub-segment of corporate loans.

9. The Commission decided to leave the delineation of the relevant market open, as it was observed that the Proposed Combination is not likely to cause an appreciable adverse effect on competition in any of the relevant markets.

10. Based on the submission of the Acquirer, the Commission noted that, in the broad market for loans/lending services in India and in all segments/sub-segments thereof, the combined market share as well as the incremental market share of Clix Capital, AIF and HFL is insignificant so as to cause any competition concerns. Further, the combined market share as well as the incremental market share of Clix Capital and HFL in the market for distribution of insurance products in India is also insignificant.

11. 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 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. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

12. The order may be revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

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

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