Acquisition of Shares in PSP Projects by Adani Infra

COMPETITION COMMISSION OF INDIA Combination Registration No. C-2025/01/1232

4th March 2025

Notice under Section 6(2) of the Competition Act, 2002 given by Adani Infra (India) Limited

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 20th January 2025, the Competition Commission of India (Commission) received a notice (Notice) under Section 6(2) of the Competition Act, 2002 (Act), given by Adani Infra (India) Limited (Adani Infra/Acquirer).

2. The Notice relates to: (i) proposed acquisition of shares of PSP Projects Limited (PSP/Target) by the Acquirer representing up to 30.07% of the share capital of the Target, in terms of the Share Purchase Agreement executed amongst Mr. Prahaladbhai S. Patel (i.e., the Seller) and the Acquirer dated 19th November, 2024 (Initial Acquisition); and (ii) proposed acquisition of up to 26% of the Voting Share Capital$^1$ of the Target from public shareholders by way of an open offer pursuant to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (as amended) (Open Offer) (The Initial Acquisition and Open Offer are collectively referred to as the Proposed Combination). Further, as agreed, the equity shares to be acquired as part of Initial Acquisition shall be reduced by such number of equity shares such that post the completion of the Open Offer, the Proposed Combination results in the Acquirer (on the one hand) and the Seller along with the other existing promoters (on the other hand) holding equal shareholding of PSP.

3. In accordance with Regulation 14(2) of the Combination Regulations, vide letter dated 31st January 2025, certain information and clarifications were sought from the Acquirer. The Acquirer submitted its response on 10th February 2025.

4. The Acquirer is an infrastructure development company with specialization in comprehensive engineering, project management, and construction services for power generation and transmission sector. The Acquirer provides Project Management Consultancy (PMC) and Engineering, Procurement and Construction (EPC) services for road, water, power, transmission and renewable projects. The Acquirer is a part of the Adani group, which is a global integrated infrastructure player with businesses in key industry verticals - resources, logistics and energy.

5. The Target, a publicly listed company on the Bombay Stock Exchange and the National Stock Exchange, is engaged in the business of providing EPC services across sectors such as industrial, institutional, residential, government, government residential and all and other work relating thereto. As submitted, it offers a diversified range of construction and allied services across industrial, institutional, government, government residential and residential projects in India and across the construction value chain, ranging from planning and design

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$^1$ Defined in the public announcement dated 19th November 2024 to mean the total voting equity share capital of the Target on a fully diluted basis as of the 10th working day from the closure of the tendering period of the Open Offer (which may change on account of any future corporate actions).

to construction and post construction activities, including mechanical, electrical and plumbing (MEP) work and other interior fit outs to private and public sector enterprises.

6. The key product/activity of the Target is provision of EPC Services and the same is provided by the Target across sectors. Thus, before going into the specific aspects of identifying relevant acquirer entities and determining the areas of horizontal overlaps/vertical linkages, it would be appropriate to understand the EPC sector dynamics.

7. The Commission noted that EPC is a project delivery model that gives contractors the responsibility of handling a project from start to finish i.e., from the initial design and engineering plans to construction and completion. EPC services are used for construction of projects across various sectors including real estate, industrial, roads, airport, power, ports, etc. In this regard, it was submitted that the kind of projects that EPC companies handle tend to be complex and large-scale, with a strong need for industry expertise. EPC services for infrastructure cover projects such as bridges, dams, roads, airports, and urban infrastructure development. Real estate EPC services can be utilised for large-scale construction projects, including all kinds of real estate projects (commercial, residential, etc.). Oil and Gas EPC projects pertain to construction and setting up of projects for offshore drilling, directional drilling, development drilling, enhanced oil recovery etc. EPC projects for the power sector include power generation EPC projects (i.e., construction of power plants and associated facilities) and power transmission projects. Specialised EPC projects pertain to the construction of marine, industrial, railways, tunnelling, mining projects etc. Accordingly, it appears plausible to segment the activity of provision of EPC services by the type of industry viz., infrastructure, real estate, oil and gas, power and specialised EPC and it also appears plausible that the aforesaid segments of EPC can be sub-segmented depending upon the nature of project, complexity and need for industry expertise.

8. Based on the information provided by the Acquirer, the Commission observed that the Adani Group is engaged in provision of EPC for infrastructure and power segments while the Target is engaged in provision of EPC for infrastructure segment. However, the activities of the Adani Group and Target do not demonstrate overlaps in any of the EPC segments considering that the Adani Group's presence in infrastructure EPC is captive in nature and the Target does not have any presence in power generation EPC projects. The Commission further noted that Adani Group (through Renew Exim DMCC) has signed binding documents to acquire ~47% stake in ITD Cementation India Ltd. (ITD), which is also engaged in providing EPC services for various sectors. Though, as submitted, the transaction is not closed yet$^2$, the Commission factored the acquisition in its competition assessment. The Commission noted that ITD is present in EPC segments of infrastructure, oil and gas, power and specialised EPC and considering the activities of Target, the horizontal overlaps can be identified in infrastructure EPC segment. The Commission further noted that overlaps between ITD and the Target in infrastructure EPC can be further narrowed down to the sub-segment of EPC for airports. The Commission accordingly assessed the Proposed Combination in the infrastructure EPC segment and sub-segment of EPC for airports while leaving the question of exact delineation of relevant market as open as irrespective of the way market is delineated, the Proposed Combination is not likely to cause appreciable adverse effect on competition (AAEC) in India for the reasons given in subsequent paragraph.

9. The Commission noted that each of ITD and the Target are estimated to have a market share of [0-5]% in infrastructure EPC market with combined share also being in the range of [0-5]%. In the sub-segment of EPC for airports, ITD and the Target have each provided EPC services to one airport and their market shares are individually estimated to be in the range of [0-5]% with combined share estimated to be in the range of [5-10]%. The Commission observed that the presence of ITD and the Target in both the infrastructure EPC segment and EPC for airports sub-segment as reflected in their market presence is insignificant to cause AAEC.

10. 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 Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have