On December 13, 2019, CCI approved the acquisition by Honey Wheat Investment Limited (‘Honey Wheat’) of 9.99% equity share capital of SBI General Insurance Company Limited (‘Target’). Honey Wheat is an indirectly wholly owned subsidiary of certain private equity funds managed by Warburg Pincus LLC (‘WP’). WP, Honey Wheat and the Target are together referred to as ‘Parties’.[1]

On the issue of horizontal overlaps, CCI noted that there were no horizontal overlaps between WP (including through its portfolio investments) and the Target.

On the issue of vertical overlaps, CCI noted that WP had investments in entities that were engaged in various banking and financial services such as AU Small Bank Finance Limited (‘AU Bank’), Avanse Financial Services Limited (‘Avanse’) and IDFC First Bank Limited (‘IDFC’) which were, inter alia, engaged in the distribution of general insurance products. Accordingly, the Target was a potential supplier of such general insurance products to these banks / financial institutions. CCI however noted that the Target did not have a significant presence in the business of general insurance in India. CCI further observed that AU Bank, Avanse and IDFC did not have a significant presence in the market for distribution of general insurance services.

Additionally, CCI noted that WP had a portfolio investment in Computer Age Management Services Private Limited which is engaged in the insurance repository services through its wholly owned subsidiary CAMS Insurance Repository Services Limited, and as a part of its business, offers certain outsourcing services to insurance companies. However, CCI noted that the market for outsourcing services is at a nascent stage and these services are only required for the purchase of insurance policies through the electronic route (which forms an insignificant part of the overall policies in India). Additionally, only a small portion of the electronically sold polices are for general insurance, where the Target has its presence. Therefore, CCI was of the opinion that such vertical linkages would not lead to any AAEC.

Accordingly, CCI approved the acquisition noting the absence of horizontal overlaps and on account of AAEC through the vertical linkages.

[1]  Combination Registration No. C-2019/11/701.