India Business Excellence Fund - IV — Combination C-2024/11/1210

Notice under Section 6(2) of the Competition Act, 2002 filed by India Business Excellence Fund- IV

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 18th November 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 India Business Excellence Fund- IV (IBEF-IV/Acquirer) in relation to its acquisition in VVDN Technologies Private Limited (Target) (hereinafter the Acquirer and the Target are together referred to as Parties).

2. The notice has been filed in relation to acquisition of (a) 1.21% to 1.24% shareholding in the Target by way of secondary purchase from shareholders and (b) 6.88% to 9.37% shareholding by subscribing to Compulsorily Convertible Debentures (CCDs) in the Combination Registration No. C-2024/11/1210

Target (on a fully diluted basis), by the Acquirer. Cumulatively, the Acquirer acquired a shareholding in the range of 8.12% to 10.57%1 in the Target on a fully diluted basis (Combination) pursuant to (i) amended and restated promoters share purchase agreement dated 13th April 2023 entered inter alia amongst the Parties and the promoters of the Target, (ii) amended and restated other shareholders share purchase agreement dated 13th April 2023 entered inter alia amongst the Parties, promoters of the Target and certain other individuals, (iii) amended and restated debenture subscription agreement dated 13th April 2023 entered inter alia amongst the Parties and the promoters of the Target and (iv) amended and restated shareholders agreement dated 13th April 2023 entered inter alia amongst the Parties and the Promoters.

3. The instant notice is filed pursuant to the order dated 16th August 2024 passed by the Commission under Section 43A of the Act inter alia directing the Acquirer to file a fresh notice.

4. The Acquirer is Category II Alternative Investment Fund (AIF) registered with the Securities and Exchange Board of India (SEBI) under SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations). It primarily invests in equity and equity-linked instruments and/or debt and/or mezzanine or other instruments of India or India related companies. It is a sector-agnostic fund, providing growth capital to mid-sized companies.

5. The Acquirer is managed by MO Alternate Investment Advisors Private Limited (MOAIAPL), whose ultimate controlling entity is Motilal Oswal Financial Services Limited (MOFSL). MOFSL is the ultimate parent entity of the Motilal Oswal group. Thus, the Acquirer belongs to the Motilal Oswal Group (Acquirer Group). Motilal Oswal Group is a diversified financial services provider with products/services such as retail and 1 By way of complete disclosure, it is submitted that prior to the Combination India Business Excellence Fund- III (IBEF-III) (another fund managed by MOAIAPL) already held 27.58% shareholding in the Target (on a fully diluted basis). Cumulatively, IBEF-III and the Acquirer (collectively, Motilal Oswal Funds) jointly held shareholding in the range of 33.81% to 35.57% (on a fully diluted basis) in the Target, as a result of the Combination. IBEF-III is an Alternative Investment Fund registered with the Securities and Exchange Board of India (SEBI) under SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations). It primarily invests in consumer business, life sciences business, financial services, and manufacturing / industrial sectors.

Combination Registration No. C-2024/11/1210 institutional broking, private wealth management, investment banking, private equity, asset management and home finance.

6. The Target, a company incorporated in India, is primarily engaged in the business of providing electronic manufacturing services (EMS), original design manufacturing (ODM), and product design services. The Target provides EMS and ODM services to both domestic and global customers in the following business verticals: 5G, networking & Wi- Fi, Internet of Things (IoT), camera-based solutions, cloud-based solutions, and data center infrastructure.

7. It is submitted that there are no horizontal overlaps between the activities undertaken by the Acquirer Group and the Target (including their affiliates as per Materiality Thresholds). However, there was an existing supply arrangement between the Target and MOAIAPL (through its portfolio company) whereby the Target provided PCB assembly services to a portfolio company of the Acquirer Group on an ad hoc basis. Accordingly, the Target and the Acquirer Group (through its portfolio company) exhibit vertical relationship/ complementary linkage in the following markets: “market for provision of PCB assembly services in India” at the upstream level and “market for manufacture and sale of COVID-19 testing kits in India” at the downstream level.

8. 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.

9. Based on the submissions of the Parties, it is noted that the market shares in each of the relevant markets identified above are in the range of [0-5] %. Further, there are several other players present in each of the relevant markets.

10. Considering the material on record, including the details provided in the notice and the assessment of the Combination based on the factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the Combination is not likely to have appreciable adverse effect on competition in India.

Combination Registration No. C-2024/11/1210

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

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

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