Merger and Acquisition: Raft of proposals awaiting CCI’s nod

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New Delhi | November 29, 2017 7:07 AM

A number of companies, such as Alibaba Singapore, Canada Pension Plan Investment Board and IndusInd Bank, have sought clearances from the Competition Commission Of India (CCI) this month for their respective merger and acquisition proposals.

Merger and Acquisition, Raft of proposals, Alibaba Singapore, Canada Pension Plan, Investment Board, CCIA A number of companies, such as Alibaba Singapore, Canada Pension Plan Investment Board and IndusInd Bank, have sought clearances from the Competition Commission Of India (CCI) this month for their respective merger and acquisition proposals.

A number of companies, such as Alibaba Singapore, Canada Pension Plan Investment Board and IndusInd Bank, have sought clearances from the Competition Commission Of India (CCI) this month for their respective merger and acquisition proposals. According to filings with the CCI, while Alibaba has proposed to pick up a stake in BigBasket, Canada Pension Plan Investment Board intends to buy around 10% in ReNew Power in two independent transactions. IndusInd Bank, too, has sought approval for its acquisition of Bharat Financial Inclusion. The proposals are under the CCI review at the moment. The filing of Alibaba and BigBasket states: “The proposed combination relates to the acquisition and purchase of shares of Supermarket Grocery Supplies (BigBasket) by Alibaba Singapore.”

“The Parties (Alibaba and BigBasket) believe that the proposed transaction does not give rise to competition concerns regardless of the relevant market definition used for the purpose of the filing,” it added. While the filing doesn’t offer specific details of the proposed deal, media reports had recently suggested that Alibaba, along with Paytm Mall, in which Alibaba is an investor, were in talks with BigBasket to buy a minority stake for about $200 million. A stake purchase in BigBasket would help Alibaba in its bid to take on rival Amazon.

Manoj Kumar, partner and head (M&A and Transactions) at consultancy firm Corporate Professionals, said Alibaba doesn’t necessarily require the approval of the Department of Industrial Policy and Promotion (DIPP), the relevant department dealing with foreign direct investment (FDI), to to pick up a stake in Supermarket Grocery Supplies (BigBasket) , as the government allows up to 100% FDI in the market-place model of e-commerce under the automatic route. However, the CCI approvals are required in cases of mergers and acquisitions to ensure that such moves don’t result in monopoilistic behaviour and give rise to ‘competition concerns’ in the relevant markets, he added.

Another filing suggests Canada Pension Plan Investment Board will acquire equity shares representing 6.33% (on a fully-diluted basis) of ReNew from Asian Development Bank. Also, it seeks to invest approximately $200 million in compulsorily convertible preference shares that will mandatorily convert into equity shares of ReNew at the stage of the initial public offering. “The ownership is expected to be not more than 10% of the equity share capital (on a fully diluted basis) of ReNew,” said the filing. The CCI clearance was also sought for the ‘amalgamation’ of Bharat Financial Inclusion (BFIL) with IndusInd Bank (IBL) for which IBL will issue its shares to the shareholders of BFIL in accordance with an entitlement ratio. The two parities also sought approval for the allotment of share warrants, on a preferential basis, to the promoters of IBL, and a composite scheme for post-amalgamation structure.

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