Acquisition in IRB Infrastructure Trust and Meerut Budaun Expressway

COMPETITION COMMISSION OF INDIA Combination Registration No.C-2024/04/1134

4^th June 2024

Notice under Section 6(2) of the Competition Act, 2002 filed by Anahera Investment Pte. Ltd., Bricklayers Investment Pte. Ltd., Chiswick Investment Pte. Ltd., Stretford End Investment Pte. Ltd., Dagenham Investment Pte. Ltd., IRB Infrastructure Developers Ltd. and IRB Infrastructure Trust

CORAM:

Ms. Ravneet Kaur Chairperson

Mr. Anil Agrawal Member

Ms. Sweta Kakkad Member

Mr. Deepak Anurag Member

Order under Section 31(1) of the Competition Act, 2002

1. On 15^th April 2024, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by Anahera Investment Pte. Ltd. (Anahera), Bricklayers Investment Pte. Ltd. (Bricklayers), Chiswick Investment Pte. Ltd. (Chiswick), Stretford End Investment Pte. Ltd (Stretford), Dagenham Investment Pte. Ltd. (Dagenham) [Anahera, Chiswick, Bricklayers, Dagenham and Stretford are registered in Singapore and collectively referred to as “GIC Unitholders”], IRB Infrastructure Developers Ltd. (IRB), and IRB Infrastructure Trust (InvIT) [GIC Unitholders, IRB and InvIT collectively referred to as “Acquirers”] for the proposed acquisition in IRB Infrastructure Trust (InvIT) and Meerut Budaun Expressway Limited (MBEL) [InvIT and MBEL are collectively referred as “Targets”] [Hereinafter, the Acquirers and the Targets are collectively referred to as the “Parties”].

2. The notice has been filed pursuant to, inter alia, the Framework agreement dated 15^th October 2022 entered amongst IRB, MBEL and Anahera.

3. The Proposed Combination involves the following steps:

• (i) Step 1: Proposed subscription to non-convertible debentures (NCDs) of MBEL by each of IRB and Anahera, respectively (NCD Subscription).
• (ii) Step 2: Proposed fresh issue of units by the InvIT to its existing unitholders (i.e., each of IRB and one or more of the GIC Unitholders in the InvIT), following which the unitholding percentage of IRB and GIC Unitholders will continue to be approximately 51% (approx.) and 49% (approx.), respectively (Trust Unit Issue).
• (iii) Step 3: Proposed acquisition of approximately 80.4% of the equity shares of MBEL and approximately 80.4% of the NCDs of MBEL by the InvIT. (MBEL Acquisition).
• (iv) Alternate InvIT NCD Subscription: In the event Anahera and IRB are unable to complete the NCD Subscription under Step 1 for any reason, then:
  • The InvIT to acquire approximately 72.42% (as against 80.4%) of the NCDs of MBEL cumulatively from IRB and Anahera under Step 3 above; and
  • The InvIT to additionally subscribe to approximately 7.98% of the NCDs of MBEL at Step 3 above, such that the InvIT’s aggregate holding of NCDs in MBEL will stand at 80.4%.

[Step 1, Step2, Step 3 and Alternate InvIT NCD Subscription are collectively referred to as “Proposed Combination”].

4. In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the Transaction of Business Relating to Combinations) Regulations, 2011, certain information(s)/ clarification(s) were sought vide communication dated 24^th April 2024, inter alia, relating to the activities of the Parties and the response to the same was received on 30^th April 2024.

5. GIC Unitholders (i.e., Anahera, Bricklayers, Chiswick, Stretford and Dagenham) are wholly-owned subsidiaries of GIC Infra Holdings Pte. Ltd. (GIC Infra) which, in turn, is a wholly-owned subsidiary of GIC (Ventures) Pte. Ltd. (GIC Ventures). Each of the GIC Unitholders are Special Purpose Vehicles (SPVs) organized as a private limited company in Singapore that is a part of a group of investment holding companies managed by GIC Special Investments Private Limited (GICSI) (GIC Group). Both GIC Ventures and GICSI are wholly-owned by the Minister for Finance, a body corporate established under Section 2(1) of the Minister for Finance (Incorporation) Act, Chapter 183 of Singapore. GIC Ventures is the ultimate parent entity of GIC Unitholders. Each GIC Unitholder holds investments and is not itself engaged in commercial operations in relation to the sale or purchase of goods and services.

6. GIC Group has several investment holding companies, which in turn have multiple portfolio investments across the world. GIC Group cumulatively holds 49% (approx.) of the units of the InvIT through GIC Unitholders. Further, GIC Group holds 49% of the equity shares of its Investment Manager, i.e., MMK Toll Road Private Limited (IM), through Croxley Investment Pte. Ltd. and 49% equity stake of MBEL and 49% of NCDs issued by MBEL (through Anahera).

7. InvIT, is a private trust registered as an infrastructure investment trust (InvIT) with the Securities and Exchange Board of India. The sponsor and project manager of the InvIT is IRB, the trustee is IDBI Trusteeship Services Limited and the investment manager is IM. The unitholding of the InvIT is currently held by IRB (approximately 51% unitholding) and GIC Unitholders (approximately 49% unitholding). The InvIT holds a portfolio of toll road assets, operated and maintained pursuant to concessions awarded by the National Highways Authority of India and certain State concessioning authorities. The InvIT currently operates 14 road projects. Following the MBEL Acquisition, MBEL will become the 15^th road asset held by the InvIT.

8. MBEL is an SPV which has been incorporated for the development of the project involving building, operation and transfer of a six-lane greenfield expressway corridor of 129.7 km between Meerut and Budaun in Uttar Pradesh. As stated above, GIC Group (through Anahera) currently holds 49% equity stake of MBEL and 49% of NCDs issued by MBEL. The remaining 51% equity stake in MBEL along with 51% NCDs issued by MBEL, is held by IRB. Accordingly, MBEL is currently jointly owned by two shareholder groups i.e., GIC Group and IRB.

9. IRB belongs to the IRB promoter group. The ultimate parent company of IRB is IRB Holding Private Limited, which is the single largest shareholder of IRB. IRB holds 51% in both the Targets. IRB is a roads and highways infrastructure developer engaged in construction works in engineering, procurement and construction (EPC) contracts, and providing operation and maintenance (O&M) services over the concession life of projects won. IRB operates its business through various subsidiaries and joint ventures. IRB has projects in 12 states in India. IRB also sponsors two InvITs, each registered under the InvIT Regulations. In addition to the InvIT, IRB is also the sponsor of a publicly offered and listed infrastructure investment trust IRB InvIT Fund (Public InvIT) and owns approximately 16% stake in the Public InvIT. In addition, IRB has ancillary interests in power generation through wind sources, and the development and operation of airports.

10. It is submitted in the notice that GIC Group is present in the market for road assets only through its investment in IRB InvIT, the IM and MBEL and there is no other investee entity of GIC Group which is directly or indirectly engaged in the market for road assets. Further, IRB is present in the said market only through its own downstream affiliates, i.e., the Public InvIT, wholly owned subsidiaries of IRB, the InvIT and MBEL. Considering the business activities of other downstream affiliates of IRB engaged in the market for road assets to overlap with the InvIT and/or MBEL, the competition assessment is provided for the said market as well as the vertical relationship in the market for O&M of highways in the road infrastructure sector in India and market for provision of EPC services in the road infrastructure sector in India at the upstream level and the market for road assets at the downstream level.

11. The Commission decides to leave precise delineation of the relevant market open, as it was observed that because of the reasons stated below, the Proposed Combination is not likely to result in appreciable adverse effect on competition irrespective of the manner in which the relevant market is delineated.

12. Based on the submissions of the Parties, it is noted that the combined market shares of Parties in the market for road assets on a pan India basis are in the range of [0-5] %, in terms of volume and in the range of [10-15] %, in terms of value. Further, there are other players present in the market. With respect to the vertical relationship, it is noted from the submissions of the Parties that the market shares of the Parties in the markets at the upstream level are in the range of [0-5] % and these markets are characterised by the presence of other players. Similarly, the Downstream Market is also characterized by the presence of other players.

13. Considering the material on record, including the details provided in the notice and the assessment of the Proposed Combination based on the factors stated in subsection (4) Section 20 of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

14. This order may stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

15. The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

16. The Secretary is directed to communicate to the Acquirer accordingly.