CCI approves NARCL acquisition of SREI Infrastructure Finance
The Competition Commission of India (CCI) has approved the acquisition of SREI Infrastructure Finance Limited by National Asset Reconstruction Company Limited (NARCL) and India Debt Resolution Company Limited (IDRCL).
The proposed transaction involves acquisition of a majority of the equity share capital of the SREI Infrastructure Finance by NARCL and IDRCL, pursuant to the resolution plan submitted by NARCL in relation to the corporate insolvency resolution process of SREI and its wholly-owned subsidiary, SREI Equipment Finance Limited, initiated under the Insolvency and Bankruptcy Code, 2016. NARCL’s resolution plan has been approved by the Committee of Creditors of the Target on 14 February 2023.
NARCL emerged as the successful bidder for two Srei Group firms – SREI Infrastructure Finance and SREI Equipment Finance – after the committee of creditors voted its resolution plan by a 90% vote share. The other bidder Authum Investment and Infrastructure Limited reportedly received 85% votes of the lenders.
NARCL emerged the highest bidder with a Net Present Value (NPV) of Rs 5,555 crore. Authum Investment and Infrastructure Limited was close second with an NPV of Rs 5,526 crore.
As per NARCL’s bid, it will make an upfront payment of Rs 3,000 crore and issue optionally convertible bonds worth Rs 6,000 crore.
About NARCL and IDRCL
NARCL is a ‘government company’ incorporated under the provisions of the Companies Act 2013 pursuant to a mandate of the government of India. It is registered with the Reserve Bank of India as an ‘asset reconstruction company’ under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The main objective or business of NARCL is to take- over the stressed assets of banks thus, assisting banks to clean-up their balance sheets. It was set up as a ‘bad bank’ with a clear mandate to clean up the legacy stressed assets with an exposure of INR 500 crore and above in the Indian banking system, backed by the government guarantee.
IDRCL was also set up pursuant to a mandate of the government of India with a primary objective of providing debt management services including, resolution of stressed assets, to NARCL. NARCL has an exclusive arrangement under a ‘Debt Management Agreement’ with IDRCL, wherein IDRCL advises NARCL on acquisition of stressed financial assets / companies and assists NARCL for the optimal resolution of the acquired assets / companies.
SREI Infrastructure Finance
SREI Infrastructure Finance and its subsidiaries are broadly engaged in providing financing/leasing for procurement of infrastructure equipment used in construction, roads, mining, railways, port and other infrastructure sectors; infrastructure project advisory services; financial advisory services; insurance broking services; and merchant banking services.
CCI observation
The Acquirers and the Target (including its subsidiaries) do not sell any product or provide any service, directly or indirectly, which is similar or identical or substitutable products or services, considering all plausible alternative(s).
The Acquirers and the Target (including its subsidiaries) do not sell any product or provide any service, directly or indirectly, which is vertically related or is complementary to others products / services / business, including any potentially vertically linked or complementary products / services / business.
Given that there are no horizontal overlaps or vertical or complementary linkages between the activities of the Parties, the Proposed Transaction is being notified under the Green Channel route under Regulation 5A(1) read with Schedule III of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (as amended).
Also read: Lenders nod to NARCL bid for Srei Infrastructure Finance, Srei Equipment Finance
