CCI Approves Brookfield’s Acquisition of Real Estate Projects held by RMZ Group and 100% equity shareholding in CoWrks

On September 29, 2020, the CCI approved the acquisition of: (i) 11 real estate projects held by RMZ group; and (ii) 100% equity shareholding in CoWrks India Private Limited (‘CoWrks’), by Brookfield Private Capital (DIFC) Limited’s (‘Brookfield’) affiliate entity. The acquisition was made pursuant to a Binding Term Sheet inter alia between the promoters of RMZ group, CoWrks and Brookfield. [1]

Brookfield and its affiliate entity belong to the Brookfield Group which is a private equity business operating as a global alternative asset manager with a focus on real estate, renewable power, infrastructure and private equity. Brookfield Group has investments in India across several sectors such as infrastructure, renewable power and private equity including the commercial real estate sector.

RMZ Group and CoWrks are controlled by members of the Menda family. RMZ Group operates as developers, managers and investors of real estate assets (primarily office spaces) with operational and under-construction assets across Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai, and Pune. 10 out of the 11 real estate projects which were to be acquired are engaged in the business of leasing commercial real estate properties to third party entities for use as traditional office spaces and 1 real estate project is in the business of leasing commercial real estate to third party entities for use as retail spaces.

CoWrks provides co-working spaces in India across Bengaluru, Chennai, Delhi-NCR, Hyderabad, and Mumbai to third parties for commercial use. These co-working spaces are provided to many individual customers in terms of desks/seats.

The CCI observed that the combined market share of Brookfield, RMZ Group and CoWrks in commercial real estate projects in Bengaluru and Pune is less than 5% both in terms of value and volume. The CCI further observed that the activities of Brookfield and CoWrks vertically overlap in Mumbai and Delhi-NCR since Brookfield is engaged in leasing traditional office space and CoWrks is in the business of taking office space, converting it into desks/ seats and offering it as co-working space. However, since CoWrks has limited presence in co-working space business in Mumbai and Delhi-NCR, the CCI approved the combination while observing that to the proposed combination will not have any appreciable adverse effect on competition (‘AAEC’).

 

[1] Combination Registration No. C-2020/09/768

Published In:Inter Alia Special Edititon - Competition Law - November 2020 [ English
Date: November 13, 2020