Background

On September 20, 2023, the CCI approved the acquisition of approximately 24.16% of the total equity shareholding in Quality Care India Limited (‘QCIL’/’Target’), on a fully diluted basis, by Centella Mauritius (‘Centella’/’Acquirer’) (‘Proposed Combination’).^[1]

Parties to Combination

Acquirer: Centella Mauritius is a newly incorporated special purpose investment vehicle and currently has no operations in India. It is majorly owned and controlled by an entity, which is advised by the affiliates of TPG Inc. (‘TPG’), the ultimate holding company of the TPG Group. TPG, is a global, diversified investment firm which operates through multiple strategies including buyout/control situations, growth & technology investing, impact investing (including climate) across multiple sectors such as financial services, technology, consumer, travel, media, real estate and healthcare. TPG has a presence in the healthcare sector through its other affiliates (other than QCIL) as well. Specifically, other TPG affiliates have operations in the areas of provision of healthcare services through hospitals, wholesale distribution of pharmaceutical products, provision of retail diagnostic centers, manufacture and sale of medical devices etc.

Target: QCIL, an unlisted public limited company, is an indirect subsidiary of Evercare Health Fund, L.P, Cayman Islands (‘Evercare’), which is also owned and controlled by TPG. QCIL operates a network of multi-speciality hospitals under the brand name CARE Hospitals across various cities in India.

Competitive Assessment

At present, TPG (indirectly) holds a majority shareholding in QCIL (as Touch Health Care Private Limited (‘THPL/Seller’), the Seller, which currently holds approximately 96.65% shareholding in QCIL is an affiliate of TPG). By way of the Proposed Combination, THPL would be selling its equity shareholding in QCIL to the Acquirer, which is also an affiliate of TPG. As such, the Proposed Transaction will effectively result in transfer of equity shareholding of QCIL from one affiliate of TPG to another. However, as noted, CDC Group Plc and Covidien Private Limited (together, ‘Co-investors’) currently hold 12.24% and 16.32% shareholding along with certain rights in Touch Holdco 3 Private Limited, the holding company of THPL, based on which the Co-Investors could be considered to be jointly controlling QCIL along with TPG. Thus, the only change resulting from the Proposed Transaction is that pursuant to the Proposed Transaction, the Co-investors of TPG will exit their investment in QCIL resulting in change in the control dynamics of QCIL. Accordingly, the CCI observed that this change in control dynamics of QCIL is the primary basis for assessment of the Proposed Combination.

The CCI also noted that by way of a separate transaction (notified to the CCI by way of Combination Regn. No. C-2023/07/1044), BCP Asia II Topco IV Pte. Ltd. (‘BCP’) will acquire approximately 72.49% of the total equity shareholding of QCIL on a fully diluted basis (‘BCP Transaction’)^[2]. The CCI observed that though the BCP Transaction needs to be assessed separately for any appreciable adverse effects on the competition dynamics, the same is also relevant to the assessment of Proposed Transaction.

The CCI examined the Proposed Transaction in the backdrop of the aforesaid specificities i.e., the exit of Co-Investors and BCP Transaction. It observed that: (i) TPG’s shareholding in QCIL (along with Co-Investors) is reducing from existing shareholding of around 97% to 24% shareholding of TPG (without the Co-Investors); (ii) under these circumstances there is no foreseeable impact on market concentration and competition dynamics from the perspective of TPG’s presence in QCIL considering the change in shareholding of TPG; and (iii) considering the extent of shareholding, nature of rights of Co-investors in QCIL etc., the Proposed Transaction is not expected to result in any changed ability/incentive of TPG vis a vis the operational dynamics of QCIL which could potentially cause any adverse effect on competition in any of the plausible markets in which QCIL may be said to be operating.

[1] Centella Mauritius / Touch Healthcare (Combination Registration No. C-2023/07/1043).

[2] BCP / Quality Care India Limited (Combination Registration No. C-2023/07/1044).