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India – CCI Approves Proposed Combination Between Alpha TC Holdings Pvt. Ltd., Tata Capital Growth Fund I, And Standard Greases & Specialities Pvt. Ltd.

28 December, 2014

 

 

On September 9, 2014, CCI approved a proposed acquisition of 8.68% post issue equity share
capital by each of Alpha TC Holdings Pvt. Ltd. (‘Alpha TC Holdings’) and Tata Capital Growth
Fund I (‘TCGF I’) (collectively referred to as the ‘Acquirers’) in Standard Greases & Specialties

Pvt. Ltd. (‘SGSPL’) on a fully diluted basis, by way of an Investment Agreement dated June 20,
2014 (‘Investment Agreement’).

 

CCI noted that Alpha TC Holdings is an investment holding company incorporated under
the laws of Singapore. It is managed by Tata Capital Advisors Pvt. Ltd. that receives non-binding
advisory services from Tata Capital Limited (‘Tata Capital’). CCI also noted that TCGF I, a subsidiary of Tata Capital, is a domestic venture capital fund registered with the Securities and Exchange Board of India. The Acquirers have investments in companies across a broad range of
industries (‘Portfolio Companies’). SGSPL is engaged in the business of manufacturing greases
and oils. 

 

The Acquirers had urged before CCI that the proposed transaction would be exempt under
Item I of Schedule I of the Competition Commission of India (Procedure in Regard to the Transaction of Business relating to Combinations, 2011 (‘Combination Regulations’) as the rights
conferred under the Investment Agreement are largely investor protection rights with no control
over the strategic commercial decisions of SGSPL.

 

CCI observed that the Investment Agreement contained certain reserved matters (‘Reserved
Matters’), including (i) appointment and removal of the Managing Director and the
Chief Financial Officer of SGSPL, (ii) increasing or decreasing the number of directors on the
board or any committees thereof other than as set out in the Investment Agreement, (iii) approving,
adopting, amending or modifying the annual budget and business plan (including any capital
expenditure budget, operating budget and financing plan), (iv) pay emoluments / bonuses to
promoters or directors, except as agreed in their employment contracts and (v) any amendment
to the memorandum of association or articles of association of SGSPL etc. in respect of which
prior consent of the Acquirers was required before any action could be taken. The Investment
Agreement also sought to confer rights upon the Acquirers including that each Acquirer would
be entitled to appoint 1 director on the board of directors of SGSPL and require such director’s
presence for quorum when a Reserved Matter is discussed.

 

CCI observed that the Reserved Matters for which consent of the Acquirers is required, included
strategic commercial decisions of SGSPL, and thus could not be considered as simple minority
protection rights. Thus, CCI was of the view that the Investment Agreement envisaged
joint control over SGSPL by the Acquirers and therefore the proposed transaction would not fall
under Item I of Schedule I to the Combination Regulations.

 

However, CCI noted that (i) the Acquirers are engaged in investment activities and SGSPL is
primarily engaged in the business of manufacturing and processing of greases and lubricating
oils and (ii) the portfolio companies of the Acquirers were not currently engaged in any activity
relating to manufacturing of greases and lubricating oils in India. Accordingly, CCI concluded
that the proposed transaction would not result in an AAEC in India and approved the transaction.
A Z B & Partners represented Alpha TC Holdings and TCGF I in the proposed transaction.

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com

Shuva Mandal, AZB & Partners 
shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com

Percy Billimoria, AZB & Partners 
percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

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