IndInfravit Trust and CPP Investment Board Private Holdings (4) Inc. — Combination C-2022/09/966

Notice under Section 6(2) of the Competition Act, 2002 jointly given by IndInfravit Trust (acting through LTIDPL IndvIT Services Limited) and CPP Investment Board Private Holdings (4) Inc.

CORAM:

Mr. Ashok Kumar Gupta Chairperson

Ms. Sangeeta Verma Member

Mr. Bhagwant Singh Bishnoi Member

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

1. On 7th September 2022, the Competition Commission of India (‘Commission’) received a Notice under Section 6(2) of the Competition Act, 2002 (‘Act’) jointly given by IndInfravit Trust (‘IndInfravit’) and CPP Investment Board Private Holdings (4) Inc. (‘CPHI-4’) [Hereinafter, IndInfravit and CPHI-4 are collectively referred to as ‘Acquirers’]. The Notice was filed pursuant to the execution of two Securities Purchase Agreements and two Letter Agreements, inter alios, amongst IndInfravit and the affiliates of Brookfield Group (‘Seller’), each dated 10th June 2022, and a Commitment Letter dated 3rd August 2022 executed between the Acquirers.

2. The Proposed Combination is envisaged as follows: Step 1: Acquisition of 100% of the equity shareholding and compulsorily convertible debentures (‘CCDs’) of the following five special purpose vehicles (‘SPVs’) by IndInfravit from the Seller: (i) Simhapuri Expressway Limited; (ii) Rayalseema Expressway Private Limited; (iii) Kosi Bridge Infrastructure Company Private Limited; (iv) Mumbai Nasik Expressway Private Limited; and (v) Gorakhpur Infrastructure Company Private Limited. [Hereinafter, the aforementioned SPVs are collectively referred to as ‘Target SPVs’].

Step 2: Allotment of additional units of IndInfravit to CPHI-4 for the purpose of part-funding the acquisition of Target SPVs. Presently, Canada Pension Plan Investment Board (‘CPPIB’), through its subsidiaries CPHI-4 and CPP Investment Board Private Holdings (3) Inc. (‘CPHI-3’), holds 43.9% unitholding in IndInfravit. Post this step, CPPIB’s cumulative unitholding in IndInfravit will be 60.0% approximately. [Hereinafter, IndInfravit, CPHI-4 and Target SPVs are collectively referred to as ‘Parties’].

3. The Parties have provided certain additional information by way of voluntary submission vide email dated 3rd October 2022.

4. IndInfravit was set up on 7th March 2018 as an irrevocable trust under the provisions of the Indian Trusts Act, 1882. It is an infrastructure investment trust registered with the Securities and Exchange Board of India (‘SEBI’). It invests in road infrastructure assets in India and has a portfolio of 13 road assets across six states. It is submitted that IndInfravit only acquires operational SPVs after completion of the construction period and is engaged in the provision of concessionaire services limited to the operation and maintenance of the assets for the balance concession period, in accordance with SEBI (Infrastructure Investment Trusts) Regulations, 2014.

5. The Sponsor of IndInfravit, namely, L&T Infrastructure Development Projects Limited (‘L&T IDPL’), is jointly held by Larsen and Toubro Limited (‘L&T’) and CPPIB India Private Holdings Inc. (a wholly owned subsidiary of CPPIB). It undertakes the operation and maintenance of highways across India under concessions awarded by the National Highways Authority of India (‘NHAI’) and state authorities. LTIDPL IndvIT Services Limited, the Investment Manager of IndInfravit, is entrusted with the responsibility of managing the assets of the IndInfravit. It is a wholly owned subsidiary of the Sponsor and hence, is under joint control of L&T and CPPIB. IDBI Trusteeship Services Limited, the trustee of IndInfravit, is a debenture trustee registered with SEBI.

6. CPHI-4 is a Canadian corporation and a wholly owned subsidiary of CPPIB. It is an investment holding company which invests in a diversified portfolio of assets. CPPIB is an investment management organisation that invests the funds transferred to it by the Canada Pension Plan (‘CPP Fund’). It invests these funds in public equities, private equities, real estate, infrastructure, and fixed income instruments.

7. It is submitted in the Notice that, in India, two affiliates of CPPIB are engaged in similar business activities as the Target SPVs, namely, National Highways Infra Trust (‘NHAI InvIT’) and L&T IDPL.

8. The Target SPVs are presently owned by the Seller. These SPVs are engaged in the operation and maintenance of highways in the states of Andhra Pradesh, Uttar Pradesh, Bihar, and Maharashtra.

9. It is submitted in the Notice that 13 existing road projects of IndInfravit and five road projects of Target SPVs do not exhibit any overlaps. As all these road projects are unique, the relevant geographic market may be considered as the combination of a point of origin and point of destination. In this regard, the Commission noted that each individual SPV operates in its confined geographical area catering to a different set of users/commuters and operating in a distinct market. Accordingly, there is no horizontal overlap between these road projects.

10. Further, based on the submission of the Acquirers, the business activities of IndInfravit, CPPIB (through L&T IDPL and NHAI InvIT), L&T (through L&T IDPL), and Target SPVs exhibit horizontal overlap in the operations and maintenance of highways in the road infrastructure sector in India. Further, the activities of the Target SPVs overlap with the activities of the existing portfolio SPVs of IndInfravit in Maharashtra and with CPPIB’s affiliates in Andhra Pradesh.

11. The Commission decided to leave the delineation of the relevant market open, as it was observed that the Proposed Combination is not likely to cause an appreciable adverse effect on competition in any of the relevant markets.

12. In the instant case, based on the submissions of the Acquirers, it is observed that the combined market shares of the Parties in the segment for operation and maintenance of highways in the road infrastructure sector in India is in the range of [0-5]% in terms of volume and [10-15]% in terms of value. Also, the incremental market shares of the Parties is in the range of [0-5]% in terms of volume as well as value. Further, this segment is fragmented, with several large competitors such as IRB Group, Cube Highways Group, Oriental Structural Engineers Group, Shrem InvIT, etc. Further, it was noted that the combined and incremental market share of the parties in Maharashtra and Andhra Pradesh is insignificant.

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 Section 20(4) 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. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

14. The order may be revoked if, at any time, the information provided by the Acquirers is found to be incorrect.

15. The information provided by the Acquirers 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 Acquirers accordingly.