On June 06, 2023, the CCI approved the acquisition of 4.04% shareholding by General Atlantic Singapore ACK Pte. Ltd. (‘GASACK’) in Acko Technology and Services Private Limited (‘Acko Tech’) subject to certain voluntary modifications offered by GASACK.
Parties and Transaction
GASACK is a wholly owned subsidiary of General Atlantic Singapore Fund Pte. Ltd. and is an investment holding company. It is ultimately owned and controlled by General Atlantic – a global growth equity investment firm.
Acko Tech provides technology development and outsourcing solutions in the insurance sector. Acko Tech also has two wholly owned subsidiaries – Acko General Insurance Limited (‘Acko GI’), a licensed general insurance provider, and Acko Life Insurance Limited (‘Acko Life’), which is seeking a license from the Insurance Regulatory and Development Authority of India to conduct life insurance business in India.
GASACK already holds 15.54% of Acko Tech’s share capital. GASACK also has certain affirmative vote rights, information rights and right of representation on the board of directors of Acko Tech. The transaction pertains to the acquisition of 4.04% shareholding in Acko Tech in two tranches through compulsorily convertible cumulative preference shares. The transaction also provides some additional rights to GASACK (over and above the rights it currently holds) – such as the right to appoint an additional director on the Acko Tech board, have its representation in certain committees, to appoint an observer on the board of directors of any of Acko Tech’s regulated subsidiaries, including Acko GI and Acko Life. GASACK filed a notice with the CCI on April 10, 2023, to notify the transaction.
Acko Tech also holds 2.95% stake and a right to appoint an observer to the board of Vivish Technologies Private Limited (‘Vivish’) – a company engaged in the business of operating a society and gated community management software, viz., MyGate. The MyGate application also contains a separate platform for buying, selling, and renting immovable property, viz., MyGate Homes.
General Atlantic (through its fund) holds a 32.4% stake in NoBroker Technologies Solutions Private Limited (‘NoBroker’) which also owns and operates a platform for buying, selling, and renting immovable property – NoBroker.in. NoBroker also has a separate gated community management software Platform – NoBrokerHood. Therefore, the CCI observed that the activities of Vivish and NoBroker exhibit horizontal overlaps.
In the horizontal overlap of operation of platform for buying, selling, and renting immovable property, the CCI did not identify any competition concerns due to the limited presence of MyGate Homes in the market.
In the vertical interface in general insurance between the parties (some subsidiaries of some portfolio companies of General Atlantic are engaged in insurance broking; Acko GI is engaged in providing general insurance), the CCI observed that the presence of these parties in this market is not significant enough to raise competition concerns.
In the market for society/gated community management solutions, the CCI observed that General Atlantic already has a significant stake in NoBroker and would gain further influence over Acko Tech which may “raise the risk of softening of competition between the two prominent players”. To address the concern, the Acquirer offered the following voluntary modifications – GASACK and any other General Atlantic entity will not, directly or indirectly: (i) participate in/ associate with/ exert influence on any matter or affair related to Vivish or investment of Acko Tech; (ii) access, knowingly receive or become privy, to any non-public information relating to Vivish which is accessed/ possessed by Acko Tech; and (iii) influence or engage with any person appointed by Acko Tech, as an observer on the board of Vivish or in any capacity in Vivish.
The CCI, based on these voluntary modifications, held that the potential competition law concern arising from the horizontal overlap between MyGate Home and NoBroker is addressed. Accordingly, the CCI approved the transaction under Section 31(1) of the Competition Act concluding that the transaction was not likely to raise any concern of appreciable adverse effect on competition in India.