Sanoti Properties LLP — Combination C-2022/04/917

Notice under Section 6(2) of the Competition Act, 2002 given by Sanoti Properties LLP

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 1st April 2022, the Competition Commission of India (‘Commission’) received a Notice under Section 6(2) of the Competition Act, 2002 (‘Act’), given by Sanoti Properties LLP (‘Sanoti’/‘Acquirer’). The Notice was filed pursuant to the execution of a Share Subscription and Shareholder’s Agreement (‘Sanoti-SSA-SHA’) and two Share Purchase Agreements (‘SPAs’), each dated 30th March 2022, inter alios, between Sanoti and Magma HDI General Insurance Company Limited (‘Magma HDI’/‘Target’) [Hereinafter, Sanoti and Magma HDI are collectively referred to as ‘Parties’].

2. The Proposed Combination involves acquisition of 55.39% of the total equity share capital in Magma HDI by Sanoti by way of the subscription of equity shares, along with the simultaneous acquisition of shares from Poonawala Fincorp Limited (‘PFL’) and Serum Institute of India Private Limited (‘SIIPL’) [Hereinafter, PFL and SIIPL are collectively referred to as ‘Sellers’]. Pursuant to the Proposed Combination, Sellers will completely exit from the Target.

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’), a letter dated 22nd April 2022, was issued to the Acquirer for removing certain information gaps in the notice, the response to which was filed on 29th April 2022 and 5th May 2022.

4. The Acquirer is a limited liability partnership incorporated in 2019. It is engaged in the business of development of commercial and residential real estate projects. However, it is submitted that, at present, Sanoti is not undertaking any development projects itself and has only invested in Avas Living Alibaug LLP (‘Avas’) to support a real estate development project being undertaken by Avas.

5. Sanoti’s partners are Mr. Adar C. Poonawalla and Rising Sun Holdings Private Limited (‘RSHPL’). The 99.99% shareholding of RSHPL is, in turn, held by Mr. Adar C. Poonawalla. Mr. Adar C. Poonawalla therefore directly and indirectly fully owns and controls Sanoti. Hence, Sanoti belongs to Mr. Adar C. Poonawalla’s Rising Sun Group of Companies (‘APRS Group’). The APRS Group, inter alia, comprises PFL (a subsidiary of RSHPL), which is one of the sellers in the Proposed Combination. PFL operates, inter alia, as a composite corporate agent registered with the Insurance Regulatory and Development Authority of India (‘IRDAI’) and is permitted to distribute general/non-life insurance products and life insurance products. Presently, PFL distributes non-life insurance products only on behalf of the Target.

6. The Target is registered with IRDAI for providing non-life insurance products in India and offers a complete range of non-life insurance products, including health, motor, fire, marine, engineering insurance, liability, home, rural, cyber and other specialised insurances in the corporate space. It was originally incorporated as a joint venture between PFL (earlier known as Magma Fincorp Limited) and HDI Global SE (‘HDI’).

The current joint venture partners of Magma HDI include PFL, HDI, Celica Developers Pvt. Ltd. and Jaguar Advisory Services Private Limited (an associate of PFL).

7. Based on the information submitted in the Notice by the Acquirer, the Commission noted that the Target and PFL (APRS Group entity) exhibit existing vertical overlaps. While the Target is engaged in the business of provision of non-life insurance products/services in India (upstream market), PFL is engaged in the business of distribution of non-life insurance products/services in India (downstream market). Accordingly, the Target and PFL are engaged in activities relating to the supply, distribution and sale of products/services which are at different stages or levels of a supply chain.

8. In this context, the Parties defined the relevant product market at the upstream level as ‘the market for general/non-life insurance products/services in India’ and at the downstream level as ‘the market for distribution of general/non-life insurance products/services in India’. The Commission has considered the segments/relevant market identified by the Parties for the purposes of assessment. However, as the material available on record shows that the Proposed Combination is not likely to cause any competition concern in India, the exact delineation of the relevant market is being left open in the case.

9. The Commission observed that the Target has a market share of [0-5]% in the upstream market in terms of both value and volume, and PFL has a market share of [0-5]% in the downstream market in terms of both value and volume. Based on the foregoing, it appears that the presence of the Parties is insignificant to lead to an ability or incentive on the part of Parties to foreclose competition in any market in India.

10. 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.

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

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