Ardor Holdings II Pte. Ltd. — Combination C-2022/09/971

Notice under Section 6(2) of the Competition Act, 2002 filed by Ardor Holdings II Pte. Ltd

CORAM: Ms. Sangeeta Verma Acting Chairperson

Mr. Bhagwant Singh Bishnoi Member

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

1. On 20.09.2022, the Competition Commission of India (Commission) received a notice under Section 6(2) of the Competition Act, 2002 (Act) filed by Ardor Holdings II Pte. Ltd (Ardor/ Purchaser). The notice has been filed pursuant to the (a) Amended and Restated Shareholders’ Agreement (SHA) dated 16.08.2022 entered by and amongst, inter alia, Hero Future Energies Global Limited (Target), Hero Future Energies Private Limited (HFE India), Hero Future Energies Asia Pte. Ltd, and BM Munjal Energies Private Limited (Sponsor); and (b) Subscription Agreement (SSA) dated 16.08.2022 entered by and between (i) the Target; (ii) the Sponsor; and (iii) the Purchaser. [Hereinafter, the SHA and SSA are collectively referred to as the Definitive Documents; the Purchaser and Target are collectively referred to as the Parties].

2. The proposed combination relates to the Purchaser’s subscription of Compulsorily Convertible Preference Shares (CCPS) in the Target and their subsequent conversion into equity shareholding in the Target (Proposed Combination). It is also mentioned that, upon conversion of the CCPS, it is expected that the equity shareholding of the Purchaser in the Combination Registration No. C-2022/09/971

Target would be between 40% and 80%. However, the exact equity shareholding would depend on the valuation of the Target at the time of the conversion of the CCPS.

3. In terms of Regulation 14 of the Competition Commission of India (Procedure in regard to transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), the Parties were required to provide certain information(s)/clarification(s) vide the Commission’s letter dated 11.10.2022 (RFI) relating to the Proposed Combination; response to the same was received on 18.10.2022. Further, certain information(s)/ clarification(s) in relation to the response to RFI were received on 22.11.2022. Additionally, the Purchaser provided certain information(s) in relation to the Proposed Combination vide its submissions on 15.12.2022 and 13.01.2023.

Parties to the Combination

Ardor/Purchaser 4. The Purchaser is a newly formed private limited company incorporated in Singapore. It is a special purpose vehicle, indirectly wholly owned by investment funds, vehicles, and/ or accounts advised and managed by various subsidiaries of KKR & Co. Inc. (KKR & Co. together with its subsidiaries, KKR). It is submitted that the Purchaser does not have any physical presence in India.

5. KKR is a global investment firm that offers alternative asset management and capital markets and insurance solutions. KKR sponsors investment funds that invest in private equity, credit, and real assets and have strategic partners that manage hedge funds.

Target

6. The Target is a private company incorporated in England and Wales. It is part of the renewable energy arm of the Hero Group. The Hero Group is a diversified conglomerate run by the Munjal family. The Target’s principal business activity is setting up/acquisition of plants/projects engaged in solar power generation and wind power generation. It is submitted that the Target does not have any physical presence in India. It is indirectly present through HFE India, a company incorporated in India and is 100% held by the Combination Registration No. C-2022/09/971

Target. HFE India is primarily engaged in the implementation of power projects and renewable power generation of energy.

Identification of Overlaps and Relevant Markets

7. It is submitted that there are no direct overlaps (horizontal, vertical, and/or complementary) between the Parties to the Proposed Combination. However, it is submitted that three KKR portfolio companies are active in the same sector (power generation through solar source) in India as the Target, i.e., Virescent Renewable Energy Trust (Virescent), Re Sustainability Limited (ReSL formerly known as Ramky), and Indigrid Trust Limited (Indigrid) (the Relevant Portfolio Companies). Additionally, it is submitted that Indigrid is active in the power transmission, which is vertically related to the power generation.

8. In view of the above, it is submitted in the notice that the relevant markets for the purpose of the Proposed Combination in relation to horizontal overlaps be considered as follows: (a) At a broad level, the market for power generation in India (Broad Market); (b) At a narrow level, the market for power generation through renewable energy sources in India (Narrower Market); and (c) At the narrowest level, the market for solar power generation in India (Narrowest Market).

9. With regard to vertical relationship, it is mentioned that there are no existing vertical or complementary overlaps between the Parties and the portfolio companies of KKR. Further, it is submitted that, apart from Indigrid, none of KKR’s portfolio companies are engaged in any activity in India relating to the production, supply, distribution, storage, sale, and service or trade in products or provision of services which are at different stages or levels of the production chain as that of the Target.

10. For the purpose of assessment of the potential vertical overlap between Indigrid and Target, the Parties have identified relevant market at the upstream level as (a) market for power generation in India (Upstream Market), and at the downstream level as (b) market for power transmission in India (Downstream Market).

11. The Commission decided to leave the exact delineation of the relevant market(s) open, as it is observed that the Proposed Combination is not likely to cause an appreciable adverse

Combination Registration No. C-2022/09/971 effect on competition in any of the plausible alternative relevant market(s) that could be delineated due to the reasons highlighted in the subsequent paragraphs of this order.

Competition Assessment

12. Based on the submissions of the Parties, it is noted that the combined market share of the Relevant Portfolio Companies and the Target is insignificant in the Broad Market, Narrow Market, and Narrowest Market in terms of installed capacity. Further, there is the presence of other players in these market(s), such as the National Thermal Power Corporation Ltd, Damodar Valley Corporation Ltd., National Hydroelectric Power Corporation Ltd., Tata Power, Adani Green Energy Limited, JSW Energy Limited, and Suzlon, who will continue to pose competitive constraints on the Parties post the Proposed Combination.

13. With respect to the potential vertical overlap, based on the submission of the Parties, it is noted that Indigrid had minuscule presence in the market for power transmission in India. Further, it is submitted that there exist other players in the market for power transmission in India, such as PowerGrid Corporation of India Limited (which owns and operates approx. 38% of India’s inter-state and inter-regional electric power transmission network), Damodar Valley Corporation, MahaTransco, Gujarat Energy Transmission Corporation Limited, Madhya Pradesh Power Transmission Company Ltd., Uttar Pradesh Transmission Corporation Ltd., Adani Transmission Limited, Tata Power Limited and Larsen & Toubro Limited, which will continue to pose competitive constraints post-combination on the parties to the combination.

14. Considering the material on record, including details provided in the notice given under Section 6(2) of the Act and assessment of the combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the 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.

15. This order may be revoked if, at any time, the information provided by the Parties is found to be incorrect.

Combination Registration No. C-2022/09/971

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

17. The Secretary is directed to communicate to the Parties accordingly.