27 May, 2015
On February 26, 2015, CCI approved the proposed acquisition by Sumitomo Mitsui Trust Bank (‘SMTB’) of 2.77 % of the paid up share capital of Reliance Capital Limited (‘RCL’) by way of a share subscription agreement and a strategic alliance agreement, dated December 25, 2014.
SMTB (incorporated in Japan) is engaged in the provision of banking and financial services, including asset management, real estate management and financial and consulting services. In India, SMTB provides loans to Indian borrowers by way of external commercial borrowings (‘ECB’). Further, Ambit Investment Advisors Private Limited (‘AIAPL’), an associate enterprise of SMTB, is engaged in the provision of fund management services to alternative investment funds and investment advisory services.
RCL (incorporated in India) is a non-banking financial services company. It is engaged in the business of asset management, mutual funds, life and general insurance, stock broking, wealth management services, home and commercial finance, financial products distribution, asset reconstruction and proprietary investments in India, either directly or through its various subsidiaries.
CCI in its order noted that the transaction could not have availed of the exemption under Item 1 of Schedule I to the Combination Regulations, as it related to a strategic alliance between SMTB and RCL for the establishment of a universal bank.
CCI observed that in each of the overlapping markets of loans to large corporate customers, investment advisory services and fund management services to alternative investment funds, SMTB and RCL have insignificant market shares, and that the presence of a large number of players in each of the markets constitute a significant competitive constraint on the parties. Accordingly, CCI approved the transaction under Section 31(1) of the Competition Act, and noted that the transaction was unlikely to give rise to any AAEC in India.
For further information, please contact:
Zia Mody, AZB & Partners
zia.mody@azbpartners.com
Abhijit Joshi, AZB & Partners
abhijit.joshi@azbpartners.com
Shuva Mandal, AZB & Partners
shuva.mandal@azbpartners.com
Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com
Percy Billimoria, AZB & Partners
percy.billimoria@azbpartners.com
Aditya Bhat, AZB & Partners
aditya.bhat@azbpartners.com
