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CPPIB India Private Holdings Inc., Allianz Infrastructure Luxembourg II S.À.R.L., and 2726247 Ontario Inc. acquire 100 percent of the issued and paid-up share capital of Interise Investment Managers Limited. The Competition Commission of India approves the proposed combination under Section 31(1) of the Competition Act, 2002. This order stands revoked if the information provided by the acquirers is incorrect at any time.
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COMPETITION COMMISSION OF INDIA Combination Registration No.C-2023/12/1093
6th February 2024
Notice under Section 6(2) of the Competition Act, 2002 filed by CPPIB India Private Holdings Inc., Allianz Infrastructure Luxembourg II S.À.R.L and 2726247 Ontario Inc.
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
On 20th December 2023, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by CPPIB India Private Holdings Inc. (CIPH), Allianz Infrastructure Luxembourg II S.À.R.L (AIL-II) and 2726247 Ontario Inc.(Ontario) [Hereinafter CIPH, AIL – II and Ontario Inc. are collectively referred to as the 'Acquirers'] for the proposed acquisition of 100% of the issued and paid-up share capital of the Interise Investment Managers Limited (Target) [Hereinafter, the Acquirers and Target are collectively referred to as 'Parties'].
The notice has been filed pursuant to the Share Purchase Agreement (SPA) dated 3rd November 2023 entered between Acquirers, Target, L&T Infrastructure Development Projects Limited (IDPL/Seller) and certain other sellers.
The proposed combination envisages acquisition of 100% of the issued and paid-up share capital of the Target (on a fully diluted basis) by the Acquirers from IDPL and certain other sellers, pursuant to SPA. On completion of the proposed combination, CIPH, AIL-II, and Ontario Inc. will respectively hold 50%, 25% and 25% of the share capital of the Target (on a fully diluted basis) [Proposed Combination].
In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, the Commission, vide communications dated 4th January 2024, sought certain information(s)/ clarification(s), inter alia, relating to the activities of the Parties and the response to the same was received on 12th January 2024.
CIPH, a Canadian corporation, is an investment holding company and a wholly owned subsidiary of CPPIB. CPPIB is a Canadian Federal Crown corporation headquartered in Toronto. It is a professional investment management organization that invests the funds transferred to it by the Canada Pension Plan (CPP Fund) in public equities, private equities, real estate, infrastructure, and fixed income instruments. CPPIB has one Indian subsidiary, CPPIB India Advisors Private Limited. It is submitted that CPPIB, through one of its affiliates1 viz. CPP Investment Board Private Holdings (4) Inc (CPHI-4), holds 25% unitholding in National Highways Infra Trust (NHAI InvIT). The NHAI InvIT, through its portfolio of assets, is engaged in the operation and maintenance of highways across India, under concessions awarded by NHAI. Further, CPPIB (through CIPH) currently holds approximately 49% stake in IDPL, which carries out operation and maintenance of highways across India, under concessions awarded by NHAI and state authorities.
AIL – II is an alternative investment fund in accordance with the laws of Luxembourg. It is ultimately owned by Allianz SE, which is the holding company of Allianz Group. The Allianz Group is an insurer and asset manager. It provides a range of products, services and solutions including property and casualty insurance, health and life insurance, business insurance and asset management. The sole activity of AIL – II in India is holding units of IndInfravit Trust (IndInfravit). The Allianz Group is primarily engaged in the provision of insurance services in India.
Ontario Inc. is an investment entity of OMERS Administration Corporation (OAC) and is wholly owned by OAC. OAC is the administrator of OMERS primary pension plan and the trustee of the pension funds thereunder. It manages a diversified portfolio of investments in public markets, private equity, infrastructure and real estate. Ontario Inc. is an investment holding vehicle and does not have any other business activities in India.
The Target is presently a wholly owned subsidiary of IDPL2, which in turn is held in the ratio of 51:49 by Larsen & Toubro Limited (L&T) and CPPIB (through CIPH). The Target is the investment manager of IndInfravit, entrusted with the responsibility of managing the assets of IndInfravit. Therefore, the Target exercises control over IndInfravit and the IndInfravit SPVs.
IndInfravit, set up as an irrevocable trust under the Indian Trusts Act, 1882, is an Infrastrusture Investment Trust (InvIT) registered with the Securities and Exchange Board of India (SEBI) under the SEBI (Infrastructure Investment Trusts) Regulations, 2014 [Invit Regulations]. CPPIB (through CPHI-4 and CPP Investment Board Private Holdings 3 Inc) holds a cumulative unitholding of 60.83% in IndInfravit. The Allianz Group (through AGF Benelux S.A.R.L.) holds 13.48% and OAC (through Ontario Inc.) holds 21.28% unitholding in IndInfravit respectively. IDBI Trusteeship Services Limited is the trustee of IndInfravit, which has delegated its roles and responsibilities to the Target. Presently, the sponsor of IndInfravit is IDPL; however, post the IDPL Sale, the Target will become a self-sponsored investment manager whereby it will act as both the manager and the sponsor of IndInfravit, as per the amendment to the InvIT Regulations dated 16th August 2023. IndInfravit Project Managers Private Limited, the project manager for the road assets, is an entity 100% owned by IndInfravit. It is submitted that in accordance with the InvIT Regulations and the mandate of IndInfravit, it acquires only operational SPVs post the construction period and operates the road assets for the balance concession period. Therefore, the IndInfravit SPVs are not engaged in construction of highways and roads but are engaged only in the operation and maintenance of the highways and roads.
It is submitted that Allianz Group and OAC, apart from holding certain units in IndInfravit, do not have any other investments in India which are in the business of operation and maintenance of highways. Accordingly, there are no overlaps or linkages between Target (through IndInfravit SPVs) with Allianz affiliates and portfolio investments of OAC .
CPPIB (through NHAI InvIT and IDPL), and the Target (through IndInfravit SPVs) are engaged in the operation and maintenance of highways across India. Further, the road assets operated by the Target (through IndInfravit SPVs) and CPPIB (through NHAI InvIT) are present in the states of: (i) Maharashtra, (ii) Karnataka, (iii) Telangana, (iv) Rajasthan and (v) Madhya Pradesh; and the road assets operated by the Target (through IndInfravit) and CPPIB (through IDPL) are present in the states of: (i) Telangana, (ii) Tamil Nadu, and (iii) Rajasthan.
Based on the presence of NHAI InvIT, IDPL and the IndInfravit SPVs, the Parties have submitted that the broad relevant market may be delineated as “market for operation and maintenance of roads and highways in India” (Broad Relevant Market) and the narrow relevant markets may be delineated at the state level for each state in which CPPIB (through NHAI InvIT and/ or IDPL), on one hand, and the Target (through IndInfravit SPVs), on the other hand, are present.
The Commission decides to leave precise delineation of the relevant market open, as it was observed that the Proposed Combination, for the reasons stated in ensuing paragraphs, is not likely to result in any appreciable adverse effect on competition irrespective of the manner in which the relevant market is delineated.
Based on the submissions of the Parties, it is noted that the combined market share of the Parties in the Broad Relevant Market is in the range of [0-5] % in terms of volume i.e., the total length of highways in kilometres in India and [5-10] % in terms of value. At the narrow state level, the combined market share of the Parties is in the range of [0-5] % only, both in terms of volume and value. Further, there are other players present in the market such as IRB Infrastructure Developers Limited, Shrem InvIT, Cube Highways, Oriental Group and Adani Group who will continue to pose competitive constraints to the Parties post the Proposed Combination.
Considering the material on record, including details provided in the notice given under sub-section (2) of Section 6 of the Act and assessment of the combination based on the factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India in any of the relevant market(s), and therefore, the Commission approves the same under Section 31(1) of the Act.
This order may stand revoked if, at any time, the information provided by the Acquirers is found to be incorrect.
The information provided by the Acquirers shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.
The Secretary is directed to communicate to the Acquirers accordingly.
