Adani’s Lanco Acquisition Approved By CCI/Competition Commission of India
Power Deal: Adani’s Lanco Acquisition Approved By CCI/Competition Commission of India
Well known corporate groups are on the path to acquisition in the power sector. Consider Adani Power’s INR 6,000 crore deal which has been approved by the Competition Commission of India. CCI has approved the deal by Adani to acquire the 1,200 MW Udupi thermal power plant from Lanco Infratech. The commission also said that anti-competition concerns will not be raised through this acquisition. This is one of the largest deals in the power sector in India. It was announced in August and it has been approved just recently.
The transaction was cleared by the Competition Commission of India which was quoted as having said this deal will not "likely to have appreciable adverse effect on competition" in the nation.
"Post combination the combined market share of the acquirer, both in terms of installed capacity and electricity generation, would not be significant enough to raise any competition concern," CCI stated in its order, dated October 24 which was recently released. Apart from this, the regulatory authority also noted that no vertical relationship exists between Udupi Power Corp Ltd/UPCL and Adani. UPCL does not employ transmission services in the context of Adani Power.
As per the proposed transaction, Adani Power will now acquire UPCL from Lanco Infratech as well as Lanco Thermal Power Ltd, individual shareholders and Portia Properties Private Ltd. UPCL also operates the 1,200 MW Udupi power plant in Karnataka. "The proposed combination relates to the business of power generation in India. The power generation market in India is characterised by presence of a large number of players," the order stated.
At the time of the announcement of the deal, Lanco Infratech indicated the deal is “valued at more than Rs.6,000 crore.” This acquisition deal includes an INR 4,000 crore debt component.
"This transaction will support the company in reducing its debt and will enable Lanco to receive about Rs 2,000 crore as cash and additionally, Adani Power will take Udupi plant's long-time debt of around Rs. 4,000 crore," the company statement has said at that time.
As per Lanco Infratech, the Udupi plant has the distinction of being the "first independent power project in the country based on 100 percent imported coal with a captive jetty of four million tonnes per annum and an external coal handling system in the new Mangalore Port Trust.”
The Udupi power plant has already signed an agreement with the government of Karnataka for further growth of 1,320 MW> A majority of the electricity generated from this plant is supplied to Karnataka, while the remaining reaches Punjab. Adani Group aims to increase power generation capacities through this acquisition.
