On October 30, 2023, the CCI approved acquisition of 5.31% of equity shares in SK Finance Limited (‘SK Finance’/‘Target’) by Excellence Fund IV (‘IBEF IV’ / ‘Acquirer’) acting through its investment manager MO Alternate Investment Advisors Private Limited (‘MO Alts/ Investment manager’) from Baring Private Equity India AIF (‘Seller 1’) and the promoter (‘Seller 2’) (together, the ‘Sellers’). 
Proposed Combination envisages the acquisition of equity shares by the Acquirer constituting 5.31% of the issued and paid-up share capital of the Target. Such acquisition by the Acquirer will be by way of (i) subscription of equity shares constituting 2.88% of the issued and paid-up share capital of the Target; and (ii) purchase of equity shares constituting 2.43% of the issued and paid-up share capital of the Target from certain existing shareholders of the Target (‘Proposed Combination’).
Parties to Combination
Acquirer: The Acquirer is a Category II Alternative Investment Fund registered with the Securities and Exchange Board of India. It primarily invests in equity and equity-linked instruments and/or debt and/or mezzanine or other instruments of Indian or India related companies. It is a sector agnostic fund, providing growth capital to mid-sized companies.
Investment Manager: MO Alts, the investment manager of the Acquirer, is a wholly owned subsidiary of Motilal Oswal Financial Services Limited (‘MOFSL’), the parent company of the Motilal Oswal Group. MO Alts also manages/advises other schemes including India Business Excellence Fund II, India Business Excellence Fund IIA and India Business Excellence Fund III, which follow a similar investment strategy to the Acquirer. MO Alts also manages the following real estate funds: (i) India Realty Excellence Fund II LLP; (ii) India Realty Excellence Fund III; (iii) India Realty Excellence Fund IV; and (iv) India Realty Excellence Fund V. These real estate funds provide mezzanine/structured credit solutions to established developers who are focused on mid-income housing at established locations. However, the real estate funds do not make any direct equity investments. MO Alts does not conduct any business operations outside of India.
Target: The Target is a Non-Banking Financial Company (‘NBFC’) registered with RBI as a Non-Banking Non-Deposit Taking Systemically Important Asset Finance Company engaged in the business of providing financing for vehicles (new and used) and loans to MSMEs. Target largely caters to low-mid income, self-employed individuals that are largely under-banked (in semi-urban / rural areas) with minimal access to organized lending.
Relevant Markets and Overlaps
CCI found certain horizontal overlaps but left the exact delineation of the relevant market open. CCI observed that, while the Acquirer does not carry out any activities, the activities of an affiliate of the Acquirer’s investment manager i.e., Motilal Oswal Home Finance Limited (a subsidiary of MOFSL) and the activities of the portfolio companies of the Acquirer i.e., IKF Finance Limited and Shubham Housing Development Finance Company Limited, overlap with Target’s activities.
CCI observed that, at the broadest level, the activities of the Parties exhibit horizontal overlap in the market for provision of loans and lending services and, at a narrow level, in the market for provision of retail loans. At a narrower level, the activities of the Parties exhibit horizontal overlaps in:
i. Market for provision of loans to MSMEs and its sub-segment e., market for provision of home improvement mortgage loans; and
ii. Market for provision of vehicle loans and its sub-segments e., markets for: (i) provision of two-wheeler loans; (ii) provision of four-wheeler passenger car loans; and (iii) provision of commercial vehicle loans which may further be segmented into market for construction equipment loans.
The CCI approved the Proposed Transaction concluding that it was not likely to have an AAEC in India for the following reasons:
i. The combined market shares and the incremental market shares of the Parties in the Relevant Markets are negligible being in the range of 0-5 %; and
ii. There are other players present in each of the markets including (i) Scheduled Commercial Banks such as State Bank of India, ICICI, Axis Bank, HDFC Bank, IndusInd Bank; (ii) Small Finance Banks (‘SFB’) such as Utkarsh SFB, Ujjivan SFB, Equitas SFB, Suryoday SFB, AU SFB; and (ii) other NBFCs such as TVS Credit, Poonawalla Finance, HDB Financial Services, Cholamandalam Investment, Mahindra & Mahindra Finance and Shriram Finance Company amongst others, who will continue to pose competitive constraints to the Parties post the Proposed Combination.