CA Basque Investments — Combination C-2022/09/968

Notice under Section 6(2) of the Competition Act, 2002 given by CA Basque Investments

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 9th September 2022, the Competition Commission of India (‘Commission’) received a Notice under Section 6(2) of the Competition Act, 2002 (‘Act’) given by CA Basque Investments (‘Acquirer’). The Notice was filed pursuant to the execution of an Investment Agreement dated 29th July 2022 between the Acquirer and Yes Bank Limited (‘Target’) [Hereinafter, Acquirer and Target are collectively referred to as ‘Parties’].

2. The Proposed Combination envisages the Acquirer’s acquisition of up to 10% of the total paid up share capital and voting rights of the Target by way of subscription to equity shares and warrants.

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 30th September 2022, certain information and clarifications were sought from the Acquirer. The response was filed by the Acquirer on 12th October 2022, after seeking extension of time. The Acquirer has also provided certain additional information by way of voluntary submission vide email dated 18th October 2022.

4. The Acquirer is a newly formed special purpose vehicle (‘SPV’) incorporated under the laws of the republic of Mauritius and does not have any business activities in India. It is an investment holding entity. The Acquirer is solely controlled by CA Marans, which is ultimately controlled by the funds managed by affiliates of the Carlyle Group Inc. (‘Acquirer Group’). The Acquirer Group is a global investment firm which manages funds that invest globally across three investment disciplines: (i) private equity; (ii) credit; and (iii) investments solutions.

5. It is submitted that the Acquirer Group indirectly holds a 32.14% shareholding in PNB Housing Finance Limited (‘PNBHFL’). PNBHFL is a Housing Finance Company (‘HFC’) registered with the National Housing Bank (‘NHB’) and is promoted by Punjab National Bank. It is primarily engaged in the business of providing housing loans to its retail customers.

6. The Target is a full-service commercial bank headquartered in Mumbai and provides a complete range of products, services, and technology-driven digital offerings catering to retail, Micro Small and Medium Enterprises (‘MSMEs’), as well as corporate clients. It has a pan-India presence. The Target is broadly engaged in the business of providing retail banking services, wholesale banking services, treasury services, and other banking operations. The Target has one wholly owned subsidiary, YES Securities (India) Limited (‘YSIL’). YSIL is a full-scale capital markets intermediary engaged in range of products and services encompassing broking, fund management, investment banking, merchant banking, research and institutional equities sales and trading.

7. In addition to the above, it is submitted in the Notice that Target provides loans to entities pursuant to a loan agreement. In case of default in the payment of debt to the Target, the Target acquires certain shareholding by invoking the pledge. Currently, the Target is holding certain shareholding in eight such entities (‘Relevant Entities’).

8. Considering the activities of the Acquirer/Acquirer Group (including its affiliates) and the Target, it is noted that PNBHFL and the Target exhibit horizontal overlaps in the broad markets for (i) deposit-taking services in India and (ii) provision of loans in India. Within the broad market for provision of loans, 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 home loans and loans against property (‘LAP’). Further, in the segment of wholesale loans, PNBHFL and the Target exhibit overlaps in the sub-segments for commercial real estate loans (construction finance) and lease rental discounting.

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 sub-segment for the provision of commercial real estate loans (construction finance), the combined market share and incremental market share of the Parties is in the range of [5-10]% and [0-5]%, respectively. In all other overlapping segments/sub-segments, the combined market share as well as incremental market share of PNBHFL and the Target is in the range of [0-5]%. Further, the presence of competitors such as SBI, HDFC Bank, and ICICI Bank exert significant competitive constraints in these segments/sub-segments.

11. Further, considering the activities of the affiliates of the Acquirer Group (‘Portfolio Entity’) and the Relevant Entities, the following limited existing or potential overlap are noted:

(i) Existing vertical overlap between Asia Satellite Telecommunications Holdings Limited1 (Portfolio Entity) and Dish TV India Limited2 (Relevant Entity); (ii) Potential vertical overlap of Rosa Power Supply Company Limited3 (Relevant Entity) with (a) AFGlobal Corporation4 and Forgital5 (Portfolio Entities); (iii) Potential vertical overlap between PNBHFL (Portfolio Entity) and Dion Global Solutions Limited6 (Relevant Entity)

12. With regard to the existing overlap, it is submitted that the market for providing satellite services is heavily regulated by Department of Space and Department of Telecommunications, Government of India. DTH operators can only use satellites commissioned by India Space Research Organization (‘ISRO’), and in case there isn’t sufficient capacity on ISRO satellites, only then they are permitted to use capacity leased by ISRO from foreign satellites. Currently, Dish TV uses a satellite operated by Asia Satellite Telecommunications Holdings Limited and the same is done through capacity leased by ISRO from foreign satellites. Further, Dish TV faces significant competition from its competitors viz., Tata Play Limited, Bharti Telemedia Ltd. and Sun Direct TV. With regard to the potential overlaps, based on the submission of the Acquirer, the Commission noted that the presence of each of these entities in their respective segments is not such as to cause any competition foreclosure concerns.

13. 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.

1Asia Satellite Telecommunications Holdings Limited is a satellite operator and serves broadcast and telecommunication industries worldwide. 2 Dish TV India Limited is engaged in the provision of direct–to–home services and related services. 3 Rosa Power Supply Company Limited is engaged in power generation. 4 AFGlobal Corporation is engaged in providing a diverse range of products that support the total plant solutions for any power generation source. 5 Forgital provides forged and laminated rolled rings which can be used for power generation. 6 Dion Global Solutions Limited is engaged in providing technology solutions (such as equity research, portfolio tracker, trading solutions, etc.), partnering with global banking and financial institutions to optimise the processing of business operations and transform their customer experience.

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

15. The information provided by the Acquirer 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 to the Acquirer accordingly.