On February 13, 2023, the CCI approved the acquisition of R Systems International Ltd. ^[1] (‘Target’) by BCP Asia II Topco II Pte. Ltd (‘Acquirer’) (‘Proposed Combination 5’). The CCI noted that Proposed Combination 5 consisted of:

i.     Acquisition of up to 51.67% of the total issued and subscribed share capital of the Target by the Acquirer from the promoter shareholders of the Target; and

ii.    Acquisition of additional shareholding in the Target, pursuant to a composite offer (i.e., open offer combined with a delisting offer) to be made by the Acquirer (together with a person acting in concert).

Trigger Documents

Share purchase agreement dated November 16, 2022, between promoter shareholders of the Target and Acquirer and the public announcement made on November 16, 2022.

Parties to Proposed Combination 5

The Acquirer is a company incorporated in Singapore, controlled by funds advised and /or managed by affiliates of Blackstone Inc.^[2] (‘Blackstone Group’). The Acquirer has not been engaged in providing any products / services and / or performing the business of investment holding in India or worldwide since its incorporation.

The Target is a public listed company incorporated in India and is the ultimate holding company within its group. The Target and its subsidiaries are engaged in the provision of information technology and IT enabled services.

Relevant Market and Overlaps

The CCI identified: (i) ‘the market for information technology (‘IT’) and IT enabled services (‘ITeS’) in India’ as the broader relevant market; and (ii) at a narrower level, (a) consulting services in India; (b) application implementation services in India (‘AIS’) (c) application managed services in India (‘AMS’), and (d) business process outsourcing (‘BPO’) services in India (collectively, ‘Narrow Segments’). The CCI, however, left the exact delineation of relevant markets open.

The CCI observed that while there is no overlap qua the Acquirer; certain Blackstone Portfolio Companies (‘Blackstone PortCos’) have horizontal overlap with the Target’s business (Consulting services, AIS, AMS and BPO services).

With regard to vertical overlaps the CCI observed that there are no existing vertical relationships between the Overlapping Blackstone PortCos and the Target (including its subsidiaries). However, given the nature of the IT and ITeS market, any potential vertical linkages between the affiliates of the Acquirer and the Target (including its subsidiaries), would be in the ordinary course of business.

Competitive Assessment

The CCI observed that:

i.     The combined market share of the parties in each of the broad relevant market and Narrower Segments are insignificant to raise any competition concerns in India;

ii.    Further, that this sector is characterised by the presence of other global as well as domestic players, such as TCS, IBM, Wipro, Deloitte, and Microsoft;

iii.   The Target earns most of its revenue outside India and earns only 0% – 5% of its revenue in India; and

iv.    Lastly, qua certain supply arrangements between Blackstone PortCos and the Target, that: (a) the same form a miniscule part of the Targets revenue; and (b) further its market share in AIS, AMS and BPO segments is minuscule.

Accordingly, the CCI approved Proposed Combination 5, holding that it was unlikely to have any AAEC in India.

[1] Combination Registration No.C-2022/11/987.

[2] Blackstone Inc. is a global alternative asset manager headquartered in the United States. Blackstone Inc. operates as an investment management firm.