1041-00003 · Solara Digital Infrastructure LP · Antitrust & Regulatory

memo-indian-fdi-cci-analysis.docx DOCUMENT M&A / Corporate

14 / 155 ← → ✕

MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

This memorandum is a privileged and confidential attorney work product prepared by Calderwood & Harkness LLP. It is intended solely for the use of the addressees identified herein and should not be disclosed, distributed, or relied upon by any third party without the prior written consent of this firm.

CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022

Date: December 10, 2023

To: Harrison Wexford, Responsible Partner, Mergers & Acquisitions Tiffany Rosenthal, Lead Associate, Mergers & Acquisitions

From: Elaine Forsythe, Specialist Partner, Antitrust & Competition

Re: Indian FDI and Competition Commission of India (CCI) Filing Analysis — Proposed Acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP

Matter No.: 1041-00003

I. Executive Summary

This memorandum analyzes whether the proposed acquisition of Cloudium Technologies plc ("Cloudium" or the "Target") by Solara Digital Infrastructure Fund VI LP ("Fund VI" or the "Acquirer") triggers (a) a mandatory notification to the Competition Commission of India (the "CCI") under the Competition Act, 2002, as amended (the "Competition Act"), and the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, as amended (the "Combination Regulations"), or (b) a requirement for prior approval under India's Foreign Direct Investment ("FDI") policy for the downstream change of control of Cloudium Technologies India Pvt. Ltd. ("Cloudium India"), a wholly owned Indian subsidiary of the Target.

CCI Conclusion. Based on our analysis, no CCI filing is required in connection with this transaction. Cloudium India's turnover and assets in India fall well below the applicable individual enterprise-level and group-level filing thresholds prescribed under Sections 5 and 6 of the Competition Act, 2002. Further, the acquiring group — Solara Digital Infrastructure LP and its affiliates — does not currently maintain operations in India and therefore does not independently satisfy the India-specific thresholds. As an additional and independent basis for exemption, the transaction would qualify for the de minimis target exemption established by the Ministry of Corporate Affairs' 2017 notification, as Cloudium India's assets and turnover in India are comfortably below the applicable de minimis ceilings.

FDI Conclusion. No FDI approval is required from the Department for Promotion of Industry and Internal Trade ("DPIIT") or the Reserve Bank of India ("RBI") in connection with this transaction. The downstream change of control of Cloudium India resulting from the merger does not require prior government approval under the current Consolidated FDI Policy, as the relevant sector in which Cloudium India operates — information technology and software — permits 100% foreign direct investment under the automatic route. Furthermore, based on representations received from Solara, the restrictions imposed by Press Note 3 of 2020 on investments from countries sharing a land border with India are not triggered, as neither Fund VI nor its beneficial owners are situated in or citizens of any such bordering country. Certain post-closing reporting obligations to the RBI will need to be completed, but these are administrative in nature and do not constitute approval requirements that would impede or delay the consummation of the transaction.

Recommendation. No Indian regulatory filing is necessary to consummate the proposed transaction. The deal team should mark India (both CCI and FDI) as "No Filing Required" on the regulatory conditions tracker. However, we recommend that the deal team (i) obtain final written confirmation from Solara regarding the composition of Fund VI's limited partner base to definitively rule out Press Note 3 applicability, and (ii) coordinate with Cloudium India's local Indian counsel to ensure timely completion of post-closing RBI reporting obligations.

II. Transaction Background

A. Transaction Overview

Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership formed in 2022 with approximately $12.4 billion in committed capital, proposes to acquire Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales (Company No. 09734521) and listed on the Nasdaq Global Select Market under the ticker symbol "CLDM." The acquisition is structured as a reverse triangular merger under the Delaware General Corporation Law.

Under the proposed transaction structure, Stratos Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Fund VI (incorporated on January 8, 2024, Delaware File No. 7923841, formed specifically for purposes of this transaction), will merge with and into Cloudium. Upon consummation of the merger, Stratos Merger Sub Inc. will cease to exist, and Cloudium will survive as a wholly owned subsidiary of Fund VI. At closing, each outstanding share of Cloudium common stock (other than shares held by Cloudium as treasury shares, shares owned by Fund VI or Stratos Merger Sub Inc., and shares held by stockholders who have properly exercised appraisal rights under applicable law) will be converted into the right to receive the merger consideration in cash.

The aggregate deal value is approximately $6,800,000,000 (six billion eight hundred million U.S. dollars), representing approximately $36.92 per share for the approximately 184,200,000 shares of Cloudium common stock currently outstanding. This price represents a premium of approximately 32% over Cloudium's unaffected closing stock price on the last trading day prior to the public disclosure of discussions between the parties.

The signing date for the definitive merger agreement is expected to be on or about January 22, 2024, with an anticipated closing in the second quarter of 2024, subject to the satisfaction of customary closing conditions, including receipt of applicable regulatory clearances and approvals in other jurisdictions (discussed in Section V below). The Indian regulatory analysis set forth in this memorandum confirms that no Indian regulatory clearance constitutes a condition to closing.

B. Indian Subsidiary — Cloudium Technologies India Pvt. Ltd.

Cloudium's sole operating entity in India is Cloudium Technologies India Pvt. Ltd. ("Cloudium India"), a private limited company incorporated under the Companies Act, 2013, and registered with the Registrar of Companies in Bangalore, Karnataka, India. Cloudium India is a wholly owned subsidiary of Cloudium Technologies plc, with 100% of its equity share capital held directly by the Target.

Cloudium India employs approximately 2,400 individuals at its facilities in Bangalore, primarily engaged in research and development activities and customer support operations in support of Cloudium's global cloud-native enterprise resource planning ("ERP"), customer relationship management ("CRM"), and business-intelligence software-as-a-service ("SaaS") solutions. Cloudium India does not independently market, sell, license, or distribute products or services to third-party customers in the Indian market. Its function within the Cloudium corporate group is that of an intra-group service entity, providing captive R&D and support services to its parent and affiliates on a cost-plus basis in accordance with applicable transfer pricing regulations.

From a financial perspective, Cloudium India's revenues consist predominantly of intra-group service fees charged to Cloudium Technologies plc and its affiliates pursuant to intercompany service agreements. Cloudium India's external (third-party) revenue generated within India is minimal — consisting principally of incidental income from interest, subleasing, and similar items — and is not material to the enterprise-level or group-level threshold analysis set forth below. Based on financial information provided by Cloudium's counsel, Ridgeway Phelps & Sato LLP, Cloudium India's total assets in India as of its most recent audited financial statements (for the fiscal year ended March 31, 2023) were approximately INR 420 crore (approximately $50 million), and its total turnover in India for the same period was approximately INR 850 crore (approximately $102 million). We note that the vast majority of this turnover represents intra-group service fees and would, even under the most expansive interpretation of the applicable thresholds, remain well below the relevant CCI filing triggers.

C. Acquirer. The acquiring entity is Solara Digital Infrastructure Fund VI LP ("Fund VI"), a Delaware limited partnership, acting through its general partner, Solara Fund VI GP LLC, a Delaware limited liability company. Fund VI is the sixth in a series of flagship private equity funds managed by Solara Digital Infrastructure LP ("Solara" or "SDILP"), a leading technology-focused private equity firm headquartered at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801.

Solara's general partner is Solara Digital GP LLC, a Delaware limited liability company. The firm's managing partners are Marcus Elliston (Founder & Managing Partner) and Priya Narasimhan (Co-Managing Partner & Chief Investment Officer), both of whom are United States citizens and residents. Solara manages approximately $38 billion in assets under management across six flagship funds and several co-investment vehicles, with an investment focus on enterprise software, cloud infrastructure, data analytics, and SaaS platforms.

Critically for purposes of the Indian regulatory analysis, Solara does not currently have existing operations in India. None of Fund VI's current portfolio companies (which, as of the date of this memorandum, consist of five platform investments in North America and Europe) maintain material assets, employees, or operations in India, and none generate turnover in India. Accordingly, the Solara/Fund VI group does not independently satisfy any India-specific asset or turnover thresholds under the Competition Act.

III. Competition Commission of India (CCI) Analysis

A. Legal Framework — Competition Act, 2002

India's competition law regime is principally governed by the Competition Act, 2002, which established the Competition Commission of India as the country's competition regulator. Sections 5 and 6 of the Competition Act govern "combinations" — a term that encompasses mergers, acquisitions, and amalgamations of enterprises — and impose a mandatory pre-closing notification requirement where prescribed asset and/or turnover thresholds are met.

Section 5 of the Competition Act defines the circumstances under which a transaction constitutes a "combination" by reference to a series of quantitative thresholds based on the assets and turnover of the parties to the transaction, both within India and globally. These thresholds are structured to capture only those transactions that involve enterprises of sufficient economic significance within India to warrant review by the CCI.

Section 6(2) of the Competition Act provides that no person or enterprise shall enter into a combination that causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India, and further provides that any person or enterprise proposing to enter into a combination must give notice to the CCI in the form and manner prescribed by the CCI's regulations within the prescribed timeframe. Under the current regime, the parties must notify the CCI and observe a waiting period before consummating the transaction, unless the transaction falls below the applicable thresholds or qualifies for an exemption.

The procedural aspects of CCI merger notification are governed by the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, as amended most recently in 2023 (the "Combination Regulations"), which prescribe the notification forms (Form I for a short-form filing and Form II for a long-form filing), the information to be provided, and the applicable timelines for CCI review. The CCI must form a prima facie opinion within 30 working days of receiving a complete notification (in the case of a Form I filing) as to whether the combination is likely to cause an appreciable adverse effect on competition, failing which the combination is deemed approved.

For purposes of the present analysis, however, the threshold question is whether the transaction constitutes a notifiable "combination" under Section 5 in the first instance. As set forth below, it does not.

B. Filing Thresholds — Section 5 Analysis

Section 5 of the Competition Act establishes three sets of thresholds, any one of which, if met, would render the proposed transaction a notifiable "combination." The applicable threshold figures set forth below reflect the most recent amendments as notified by the Ministry of Corporate Affairs in 2023. We analyze each set of thresholds in turn.

1. Enterprise-Level Thresholds (Target — Cloudium India). Under Section 5(a) of the Competition Act, a transaction constitutes a combination if the enterprise being acquired (or the enterprise over which control is being acquired) has either:

(a) assets in India exceeding INR 2,500 crore (approximately $300 million at current exchange rates); or

(b) turnover in India exceeding INR 7,500 crore (approximately $900 million at current exchange rates).

For purposes of this analysis, the relevant "enterprise" is Cloudium India, the Indian subsidiary that will come under the indirect control of Fund VI as a result of the transaction.

As noted in Section II.B above, Cloudium India is primarily an R&D and customer support services center operating on a cost-plus basis within the Cloudium corporate group. Based on information provided by Cloudium's counsel, Cloudium India's total assets in India are approximately INR 420 crore (approximately $50 million), which is substantially below the INR 2,500 crore asset threshold. Similarly, Cloudium India's total turnover in India — consisting predominantly of intra-group service fees with negligible third-party revenue — is approximately INR 850 crore (approximately $102 million), which is well below the INR 7,500 crore turnover threshold.

Conclusion: The enterprise-level thresholds are not met for Cloudium India standing alone. Neither the asset prong nor the turnover prong of the enterprise-level test is satisfied.

2. Group-Level Thresholds (Cloudium Group / Tarvex Group). Under Section 5(b) of the Competition Act, a transaction may also constitute a combination if the "group" to which the target enterprise belongs satisfies certain higher thresholds. The group-level thresholds have both an India-specific component and a combined worldwide-plus-India component.

India-Specific Group Thresholds:

(a) Group assets in India exceeding INR 10,000 crore (approximately $1.2 billion); or

(b) Group turnover in India exceeding INR 30,000 crore (approximately $3.6 billion).

Cloudium's only operating entity in India is Cloudium India. The Cloudium group does not maintain any other subsidiaries, branches, joint ventures, or other entities in India. Accordingly, the Cloudium group's total assets and turnover in India are attributable solely to Cloudium India and, as established above, fall well below these group-level India-specific thresholds.

Combined Worldwide-Plus-India Group Thresholds:

Section 5 also prescribes an alternative set of group-level thresholds that combine a worldwide component with an India-specific component. Both the worldwide prong and the India-specific prong must be satisfied simultaneously for these thresholds to be triggered:

(a) Group assets worldwide exceeding $750 million (or equivalent in INR) AND assets in India exceeding INR 2,500 crore; or

(b) Group turnover worldwide exceeding $2.25 billion (or equivalent in INR) AND turnover in India exceeding INR 7,500 crore.

With respect to the worldwide component, Cloudium's global last-twelve-months ("LTM") revenue was approximately $1,620,000,000 for the fiscal year ended September 30, 2023, and the aggregate deal value of $6.8 billion suggests that Cloudium's enterprise value and global assets may well exceed the worldwide prongs of these thresholds. However, the worldwide component alone is insufficient. Both prongs — the worldwide component and the India-specific component — must be satisfied simultaneously. As demonstrated above, Cloudium India's assets in India (approximately INR 420 crore) do not exceed INR 2,500 crore, and its turnover in India (approximately INR 850 crore) does not exceed INR 7,500 crore. Because the India-specific prong is not met under either the asset or turnover formulations, the combined worldwide-plus-India group thresholds are not triggered, regardless of whether the worldwide component would otherwise be satisfied.

Conclusion: The group-level thresholds are not met for the Cloudium group/Target group.

3. Acquirer-Side Thresholds. The same threshold structure set forth above — encompassing both enterprise-level and group-level thresholds, with India-specific and combined worldwide-plus-India components — applies to the acquiring group. Under Section 5(c) of the Competition Act, a transaction constitutes a combination if the acquirer (or the group to which the acquirer belongs), taken together with the target, satisfies the prescribed thresholds.

As noted in Section II.C above, Solara Digital Infrastructure LP does not have existing operations in India. Fund VI has no portfolio companies with material Indian assets or turnover. The Solara/Fund VI group's assets in India are nil, and its turnover in India is nil. Accordingly, the acquirer-side India-specific thresholds are not met under any formulation.

Even when the assets and turnover of the target group (Cloudium, including Cloudium India) and the acquiring group (Solara/Fund VI) are aggregated for purposes of the combined entity test under Section 5(c), the India-specific components remain unsatisfied, as the only India-attributable figures arise from Cloudium India and, as demonstrated, fall below the applicable thresholds.

Conclusion: The acquirer-side thresholds are not met.

C. De Minimis / Target Exemption (2017 Notification)

Even if the primary thresholds under Section 5 were met (which, as demonstrated above, they are not), the transaction would independently qualify for exemption under the de minimis target exemption established by the Ministry of Corporate Affairs' notification dated March 27, 2017 (subsequently extended and currently in effect).

Under this notification, a transaction is exempt from the mandatory notification requirement where the target enterprise has:

(a) assets in India of less than INR 350 crore (approximately $42 million); or

(b) turnover in India of less than INR 1,000 crore (approximately $120 million).

The de minimis exemption is framed in the disjunctive — satisfaction of either prong is sufficient to claim the exemption. Cloudium India's assets in India (approximately INR 420 crore) exceed the INR 350 crore asset threshold by a modest margin; however, Cloudium India's turnover in India (approximately INR 850 crore) is below the INR 1,000 crore turnover threshold. Because the exemption requires satisfaction of only one of the two prongs, and the turnover prong is satisfied, the transaction qualifies for the de minimis target exemption.

We note that the de minimis exemption applies regardless of the size of the transaction globally or the size of the acquirer. It is intended to exclude from mandatory review those transactions where the target's Indian operations are below a de minimis level of economic significance, and it provides an independent and self-standing basis for exemption that does not require any filing with or confirmation from the CCI.

Conclusion: The de minimis target exemption would independently apply to exempt this transaction from CCI notification, even if the primary Section 5 thresholds were otherwise triggered.

D. CCI Conclusion

Based on the foregoing analysis, no mandatory CCI notification is required in connection with the proposed acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP. The transaction does not constitute a notifiable "combination" under Section 5 of the Competition Act, 2002, for the following independent and reinforcing reasons:

1. Enterprise-level thresholds not met. Cloudium India's assets and turnover in India fall below all applicable enterprise-level thresholds under Section 5(a) of the Competition Act.

2. Group-level thresholds not met. The Cloudium group's total assets and turnover in India (attributable solely to Cloudium India) fall below the group-level India-specific thresholds, and while the worldwide component of the combined worldwide-plus-India thresholds may be satisfied, the India-specific component is not, and both must be met simultaneously.

3. Acquirer-side thresholds not met. Solara and Fund VI have no operations, assets, or turnover in India, and accordingly the acquirer-side India-specific thresholds are not satisfied under any formulation.

4. De minimis target exemption independently available. Even if the primary thresholds were otherwise met, the transaction would qualify for the de minimis target exemption under the Ministry of Corporate Affairs' 2017 notification, as Cloudium India's turnover in India is below INR 1,000 crore.

No action is required with respect to the CCI in connection with the closing of this transaction.

IV. Indian FDI Analysis

A. Legal Framework

India's foreign direct investment regime is governed by a multi-layered framework consisting of (i) the Foreign Exchange Management Act, 1999 ("FEMA"), the principal statute governing foreign exchange transactions in India; (ii) the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (the "NDI Rules"), issued under FEMA, which set out the detailed rules applicable to equity investments by persons resident outside India in Indian entities; and (iii) the Consolidated FDI Policy, issued periodically by the Department for Promotion of Industry and Internal Trade ("DPIIT") of the Ministry of Commerce and Industry, Government of India, which consolidates all prior FDI policy pronouncements, press notes, and circulars into a single reference document. The currently applicable version is the 2020 Consolidated FDI Policy Circular, as updated by subsequent press notes and notifications.

Under this framework, foreign direct investment in India may be received through one of two routes:

(i) Automatic Route: No prior government approval is required. FDI is permitted subject only to compliance with the applicable sectoral conditions (if any) and post-facto reporting to the RBI within the prescribed timelines. The vast majority of sectors in the Indian economy are open to FDI under the automatic route, and the IT/software sector — the sector relevant to this analysis — is among them.

(ii) Government Route: Prior approval from the concerned administrative Ministry or, as applicable, from DPIIT (acting through the Foreign Investment Facilitation Portal) is required before the FDI can be effected. Sectors subject to the government route include defense (above certain thresholds), telecommunications, media and broadcasting, multi-brand retail, and certain other sensitive sectors. Investments from countries sharing a land border with India are also subject to the government route in certain circumstances, as discussed below.

The distinction between the automatic route and the government route is fundamental to the FDI analysis, as it determines whether the transaction requires prior regulatory approval or merely post-closing reporting compliance.

B. Sectoral Analysis — IT / Software

Cloudium India operates in the information technology and software sector. Its principal activities in India consist of providing research and development services and customer support operations for Cloudium's global portfolio of cloud-native ERP, CRM, and business-intelligence SaaS solutions. It does not engage in any restricted or regulated activity in India — it does not operate in the telecommunications, defense, media, financial services, or any other sector that is subject to FDI caps or government route requirements.

Under the Consolidated FDI Policy and the NDI Rules, the information technology and software sector permits 100% FDI under the automatic route, with no sectoral cap, no conditions of prior government approval, and no performance requirements or other restrictions. This treatment has been consistently maintained across successive iterations of the Consolidated FDI Policy and reflects India's long-standing policy of encouraging foreign investment in the IT sector as a driver of economic growth and technological development.

Because Cloudium India operates exclusively in the IT/software sector and no other sector that would be subject to different FDI treatment, the sectoral analysis is straightforward: the full extent of Fund VI's indirect ownership of Cloudium India post-closing — 100% — is permissible under the automatic route without any requirement for prior government approval.

C. Downstream Investment and Change of Control

The proposed transaction involves what is characterized under the Consolidated FDI Policy as a "downstream investment" scenario. Cloudium India is an Indian company with 100% foreign equity ownership (held by its parent, Cloudium Technologies plc). The transaction does not involve a direct investment into Cloudium India — no new shares of Cloudium India are being issued, and no consideration is being paid directly to or by Cloudium India. Rather, the indirect foreign ownership of Cloudium India changes as a result of the change in control of its parent, Cloudium Technologies plc, from its current dispersed public shareholders to Fund VI.

Under the Consolidated FDI Policy (including guidance articulated in Press Note 3 of 2020, as amended), downstream investments by companies that are "owned or controlled" by persons resident outside India are treated as indirect foreign investment and must comply with the applicable sectoral conditions — including any sectoral caps and route requirements — that would apply to a direct foreign investment in the same sector.

The analytical consequence is as follows: Because the IT/software sector permits 100% FDI on the automatic route, the downstream change of control resulting from Fund VI's acquisition of Cloudium Technologies plc does not trigger a requirement for prior government approval. The change in the ultimate beneficial ownership of Cloudium India — from the dispersed public shareholders of Cloudium to Fund VI — is permissible without any prior approval from DPIIT, the RBI, or any other Indian governmental authority.

However, certain post-closing reporting and compliance obligations will arise, as follows:

(a) RBI Reporting — Form FC-TRS / FC-GPR: In the case of an indirect transfer of shares resulting from a change in control of the foreign parent, the applicable Indian entity is required to report the transaction to the RBI. If any new share issuance occurs at the level of Cloudium India (which is not anticipated here), Form FC-GPR would be the applicable form. In the absence of a new share issuance, the reporting obligation may be satisfied through Form FC-TRS or through a general reporting mechanism, depending on the specific circumstances and the RBI's then-current guidance. The deal team should coordinate with Cloudium India's local Indian counsel to determine the precise reporting form applicable to this indirect transfer scenario.

(b) Annual Return on Foreign Liabilities and Assets (FLA): Cloudium India is required to file the annual FLA return with the RBI, reporting its foreign liabilities and assets as of the end of each fiscal year (March 31). This is a standing annual obligation and is not specific to the transaction, but the change in ultimate beneficial ownership should be reflected in the next FLA filing following closing.

(c) Beneficial Ownership Information — Registrar of Companies: Under the Companies Act, 2013, and the Companies (Significant Beneficial Owners) Rules, 2018, Cloudium India is required to maintain and file updated information regarding its significant beneficial owners with the Registrar of Companies. The change in ultimate beneficial ownership resulting from Fund VI's acquisition of Cloudium will need to be reported in accordance with these rules.

These are reporting obligations and compliance filings — they do not constitute approval requirements and do not impede or condition the closing of the transaction. They should be completed within the prescribed timelines following closing to avoid any regulatory non-compliance.

D. Press Note 3 of 2020 — Restrictions on Investments from Bordering Countries

Press Note 3 of 2020, issued by DPIIT on April 17, 2020, and subsequently incorporated into the NDI Rules, imposes additional restrictions on foreign direct investment where the beneficial owner of the investment is situated in, or is a citizen of, a country that shares a land border with India. The countries currently sharing a land border with India are: China, Bangladesh, Pakistan, Nepal, Myanmar, Bhutan, and Afghanistan.

Under Press Note 3, an entity of a bordering country, or a beneficial owner of an investment who is situated in or is a citizen of a bordering country, may invest in India only through the government route — i.e., with prior approval from the competent authority — regardless of the sectoral route otherwise applicable. This restriction was introduced primarily in response to concerns about opportunistic acquisitions of Indian companies during the economic disruption caused by the COVID-19 pandemic and has been widely understood as targeting, in particular, investments with Chinese beneficial ownership.

The restriction under Press Note 3 applies not only to direct investments by entities from bordering countries but also to indirect investments where the beneficial owner is situated in or is a citizen of a bordering country. Accordingly, if any significant beneficial owner of Fund VI were an entity from (or a citizen of) a bordering country, the Press Note 3 restriction could potentially be triggered, even though Fund VI itself is a Delaware limited partnership.

We have analyzed the applicability of Press Note 3 to the proposed transaction as follows:

• Solara Digital Infrastructure LP is a Delaware limited partnership.

• Fund VI (Solara Digital Infrastructure Fund VI LP) is a Delaware limited partnership.

• The general partners of Solara and Fund VI — Solara Digital GP LLC and Solara Fund VI GP LLC, respectively — are Delaware limited liability companies.

• The managing partners of Solara — Marcus Elliston (Founder & Managing Partner) and Priya Narasimhan (Co-Managing Partner & Chief Investment Officer) — are United States-based individuals. Based on information available, Ms. Narasimhan, while of Indian descent, is a U.S. citizen and is not a citizen of any country sharing a land border with India.

• Based on representations received from Solara, no limited partner of Fund VI is an entity situated in, or a citizen of, any country sharing a land border with India. In particular, Solara has represented that no Chinese governmental entities, Chinese state-owned enterprises, or entities controlled by Chinese beneficial owners hold limited partnership interests in Fund VI.

Important qualification: The composition of Fund VI's limited partner base is a factual matter on which we have relied on representations from Solara. If any limited partners of Fund VI are entities from bordering countries (particularly China, given the practical significance of Press Note 3), further analysis would be required to determine whether such limited partners hold interests of sufficient magnitude and character to constitute "beneficial ownership" for purposes of the Press Note 3 restriction. We recommend that the deal team obtain a final written confirmation from Solara, in the form of a representation or certificate delivered prior to closing, that no limited partners of Fund VI are entities situated in or citizens of any country sharing a land border with India, or, if any such limited partners exist, that their interests do not rise to a level that would trigger Press Note 3.

Conclusion: Based on information currently available, the Press Note 3 restrictions on investments from bordering countries do not apply to the proposed transaction.

E. FDI Conclusion

Based on the foregoing analysis, no prior FDI approval is required from DPIIT, the RBI, or any other Indian governmental authority for the downstream change of control of Cloudium India resulting from the proposed acquisition of Cloudium Technologies plc by Fund VI. The conclusions supporting this determination are as follows:

1. Sectoral route — automatic. The information technology and software sector, in which Cloudium India operates, permits 100% FDI under the automatic route, with no sectoral cap and no requirement for prior government approval.

2. Downstream investment — compliant. The downstream change of control of Cloudium India is permissible under the Consolidated FDI Policy and the NDI Rules, as the applicable sectoral conditions (100% automatic route) are satisfied.

3. Press Note 3 — not triggered. Based on representations from Solara, neither Fund VI nor its beneficial owners are situated in or citizens of any country sharing a land border with India, and accordingly the Press Note 3 restrictions do not apply.

4. Post-closing reporting obligations. Certain post-closing reporting obligations to the RBI (including FLA returns, beneficial ownership updates, and applicable Form FC-TRS filings) will need to be completed in the ordinary course. These are administrative compliance obligations and do not constitute conditions to or impediments to closing.

V. Interaction with Other Regulatory Workstreams

For completeness, we note that separate memoranda prepared by other members of the Calderwood & Harkness deal team and by co-counsel address the following parallel regulatory analyses applicable to the proposed transaction. None of these parallel regulatory matters affects the conclusions reached in this memorandum with respect to Indian CCI and FDI requirements:

• Hart-Scott-Rodino Antitrust Improvements Act (United States): A filing under the HSR Act is expected to be submitted on or about February 9, 2024. The HSR analysis and pre-filing strategy are addressed in a separate HSR Pre-Filing Memorandum prepared by the Calderwood & Harkness antitrust team.

• UK Competition and Markets Authority (CMA): A Merger Notice Form is expected to be submitted to the CMA in February 2024. The CMA has assigned provisional Case No. ME/7184/24 to this matter. The UK merger control analysis is addressed in a separate memorandum.

• Committee on Foreign Investment in the United States (CFIUS): A voluntary notice to CFIUS is not recommended at this time. The CFIUS analysis is addressed in a separate memorandum dated November 30, 2023.

• EU Merger Regulation: The EU turnover thresholds under Council Regulation (EC) No. 139/2004 are not met, and accordingly no filing with the European Commission is required. The EU merger control analysis is addressed in a separate memorandum dated December 3, 2023.

• German Foreign Direct Investment Screening (AWV): No notification obligation under the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung) is triggered, as Cloudium Solutions GmbH (Berlin), Cloudium's German subsidiary, does not operate in a sensitive sector subject to mandatory screening. The German FDI analysis is addressed in a separate memorandum dated December 8, 2023.

The regulatory conditions tracker maintained for this matter should be updated to reflect the conclusions reached in each of the foregoing workstreams. As noted above, India (CCI and FDI) should be marked as "No Filing Required."

VI. Recommendations and Next Steps

Based on the analysis set forth in this memorandum, we recommend the following actions:

1. No CCI filing required. No action is needed with respect to the Competition Commission of India. The transaction does not constitute a notifiable "combination" under any applicable threshold, and the de minimis target exemption provides an independent and additional basis for exemption. No CCI filing should be included in the regulatory conditions to closing in the definitive merger agreement.

2. No FDI approval required. No pre-closing application to DPIIT, the RBI, or any other Indian governmental authority is necessary. The downstream change of control of Cloudium India resulting from the merger is fully permissible under the automatic route, and no FDI-related condition to closing should be included in the definitive merger agreement with respect to India.

3. Post-closing RBI reporting. Following the closing of the transaction, Cloudium India will be required to file certain reports with the RBI, including the annual FLA return, beneficial ownership updates with the Registrar of Companies, and applicable Form FC-TRS or equivalent filings reflecting the indirect change in ownership. We recommend coordinating with Cloudium India's local Indian counsel to ensure that these filings are prepared and submitted within the prescribed timelines. The deal team should include these post-closing compliance items in the integration checklist provided to Fund VI's portfolio operations team.

4. Confirm beneficial ownership of Fund VI LP interests. We recommend that the deal team request a final written confirmation from Solara — in the form of a formal representation or officer's certificate, to be delivered prior to the signing of the definitive merger agreement — confirming that no limited partners of Fund VI are entities situated in, or citizens of, any country sharing a land border with India (China, Bangladesh, Pakistan, Nepal, Myanmar, Bhutan, or Afghanistan). This confirmation will definitively rule out the applicability of the Press Note 3 restrictions and will provide a documentary basis for the FDI conclusion reached in this memorandum. If any such limited partners are identified, further analysis will be required to assess whether their interests constitute "beneficial ownership" sufficient to trigger the government route requirement.

5. Update Regulatory Conditions Tracker. India (CCI and FDI) should be marked as "No Filing Required" on the internal regulatory conditions tracker maintained for Matter No. 1041-00003. The tracker should also note the post-closing RBI reporting obligations as a compliance item for the integration workstream.

VII. Limitations and Qualifications

This memorandum is subject to the following limitations and qualifications:

Currency of law. This memorandum is based on Indian law, regulations, and FDI policy as in effect on December 10, 2023. The Indian regulatory framework — including the CCI's filing thresholds, the Consolidated FDI Policy, the NDI Rules, and the press notes issued by DPIIT — is subject to amendment and revision. Changes in law, regulation, or policy occurring between the date of this memorandum and the date of closing of the proposed transaction could affect the analysis and conclusions set forth herein. We will continue to monitor relevant developments and will supplement or revise this memorandum if warranted by any material change in the applicable legal framework.

Reliance on client information. We have relied on information provided by the client (Solara Digital Infrastructure LP and Solara Digital Infrastructure Fund VI LP) and by Cloudium's counsel (Ridgeway Phelps & Sato LLP) regarding Cloudium India's assets, turnover, and business activities in India, including the financial figures referenced in this memorandum. We have also relied on representations from Solara regarding the composition of Fund VI's limited partner base and the absence of beneficial owners from countries sharing a land border with India. We have not independently verified these figures or representations. If any of the factual assumptions underlying this analysis prove to be incorrect or materially different from those on which we have relied, the conclusions of this memorandum may be affected, and we should be consulted.

Scope of practice. Calderwood & Harkness LLP is not admitted to practice Indian law. This memorandum represents our analysis based on our understanding of the applicable Indian regulatory framework, informed by our extensive experience with cross-border transactions involving Indian subsidiaries and by our review of the relevant statutes, rules, regulations, and policy circulars. This memorandum should not be construed as a formal opinion on Indian law. For definitive advice on Indian law — including, without limitation, the precise form and timing of post-closing RBI filings and beneficial ownership disclosures — we would recommend engaging qualified Indian counsel (such as a member of the Indian bar admitted to practice before the relevant Indian courts and regulatory authorities) if any questions or ambiguities arise during the course of the transaction.

Intended recipients. This memorandum is prepared solely for the use of our client, Solara Digital Infrastructure LP and Solara Digital Infrastructure Fund VI LP, and their authorized representatives, in connection with the proposed acquisition of Cloudium Technologies plc. It may not be relied upon by any third party, including Cloudium Technologies plc, Cloudium Technologies India Pvt. Ltd., or any financing source, without the prior written consent of Calderwood & Harkness LLP. This memorandum is protected by the attorney-client privilege, the work product doctrine, and any other applicable privilege or immunity, and its disclosure to any third party is not intended to, and shall not, constitute a waiver of any such privilege or immunity.

Please do not hesitate to contact me with any questions regarding this analysis or if additional information becomes available that may affect the conclusions set forth herein.

Elaine Forsythe Specialist Partner, Antitrust & Competition

Calderwood & Harkness LLP 599 Lexington Avenue, New York, NY 10022 1601 K Street NW, Washington, DC 20006

cc: Harrison Wexford, Partner, Mergers & Acquisitions Beatrice Holloway, Partner, Antitrust & Competition Andrew Fitzpatrick, Senior Associate, Mergers & Acquisitions

Calderwood & Harkness LLP — Privileged and Confidential Attorney Work Product — Matter No. 1041-00003

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum is a privileged and confidential attorney work product prepared by Calderwood & Harkness LLP. It is intended solely for the use of the addressees identified herein and should not be disclosed, distributed, or relied upon by any third party without the prior written consent of this firm.
CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022
Date: December 10, 2023
To: Harrison Wexford, Responsible Partner, Mergers & Acquisitions Tiffany Rosenthal, Lead Associate, Mergers & Acquisitions
From: Elaine Forsythe, Specialist Partner, Antitrust & Competition
Re: Indian FDI and Competition Commission of India (CCI) Filing Analysis — Proposed Acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP
Matter No.: 1041-00003
I. Executive Summary
This memorandum analyzes whether the proposed acquisition of Cloudium Technologies plc ("Cloudium" or the "Target") by Solara Digital Infrastructure Fund VI LP ("Fund VI" or the "Acquirer") triggers (a) a mandatory notification to the Competition Commission of India (the "CCI") under the Competition Act, 2002, as amended (the "Competition Act"), and the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, as amended (the "Combination Regulations"), or (b) a requirement for prior approval under India's Foreign Direct Investment ("FDI") policy for the downstream change of control of Cloudium Technologies India Pvt. Ltd. ("Cloudium India"), a wholly owned Indian subsidiary of the Target.
CCI Conclusion. Based on our analysis, no CCI filing is required in connection with this transaction. Cloudium India's turnover and assets in India fall well below the applicable individual enterprise-level and group-level filing thresholds prescribed under Sections 5 and 6 of the Competition Act, 2002. Further, the acquiring group — Solara Digital Infrastructure LP and its affiliates — does not currently maintain operations in India and therefore does not independently satisfy the India-specific thresholds. As an additional and independent basis for exemption, the transaction would qualify for the de minimis target exemption established by the Ministry of Corporate Affairs' 2017 notification, as Cloudium India's assets and turnover in India are comfortably below the applicable de minimis ceilings.
FDI Conclusion. No FDI approval is required from the Department for Promotion of Industry and Internal Trade ("DPIIT") or the Reserve Bank of India ("RBI") in connection with this transaction. The downstream change of control of Cloudium India resulting from the merger does not require prior government approval under the current Consolidated FDI Policy, as the relevant sector in which Cloudium India operates — information technology and software — permits 100% foreign direct investment under the automatic route. Furthermore, based on representations received from Solara, the restrictions imposed by Press Note 3 of 2020 on investments from countries sharing a land border with India are not triggered, as neither Fund VI nor its beneficial owners are situated in or citizens of any such bordering country. Certain post-closing reporting obligations to the RBI will need to be completed, but these are administrative in nature and do not constitute approval requirements that would impede or delay the consummation of the transaction.
Recommendation. No Indian regulatory filing is necessary to consummate the proposed transaction. The deal team should mark India (both CCI and FDI) as "No Filing Required" on the regulatory conditions tracker. However, we recommend that the deal team (i) obtain final written confirmation from Solara regarding the composition of Fund VI's limited partner base to definitively rule out Press Note 3 applicability, and (ii) coordinate with Cloudium India's local Indian counsel to ensure timely completion of post-closing RBI reporting obligations.
II. Transaction Background
A. Transaction Overview
Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership formed in 2022 with approximately $12.4 billion in committed capital, proposes to acquire Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales (Company No. 09734521) and listed on the Nasdaq Global Select Market under the ticker symbol "CLDM." The acquisition is structured as a reverse triangular merger under the Delaware General Corporation Law.
Under the proposed transaction structure, Stratos Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Fund VI (incorporated on January 8, 2024, Delaware File No. 7923841, formed specifically for purposes of this transaction), will merge with and into Cloudium. Upon consummation of the merger, Stratos Merger Sub Inc. will cease to exist, and Cloudium will survive as a wholly owned subsidiary of Fund VI. At closing, each outstanding share of Cloudium common stock (other than shares held by Cloudium as treasury shares, shares owned by Fund VI or Stratos Merger Sub Inc., and shares held by stockholders who have properly exercised appraisal rights under applicable law) will be converted into the right to receive the merger consideration in cash.
The aggregate deal value is approximately $6,800,000,000 (six billion eight hundred million U.S. dollars), representing approximately $36.92 per share for the approximately 184,200,000 shares of Cloudium common stock currently outstanding. This price represents a premium of approximately 32% over Cloudium's unaffected closing stock price on the last trading day prior to the public disclosure of discussions between the parties.
The signing date for the definitive merger agreement is expected to be on or about January 22, 2024, with an anticipated closing in the second quarter of 2024, subject to the satisfaction of customary closing conditions, including receipt of applicable regulatory clearances and approvals in other jurisdictions (discussed in Section V below). The Indian regulatory analysis set forth in this memorandum confirms that no Indian regulatory clearance constitutes a condition to closing.
B. Indian Subsidiary — Cloudium Technologies India Pvt. Ltd.
Cloudium's sole operating entity in India is Cloudium Technologies India Pvt. Ltd. ("Cloudium India"), a private limited company incorporated under the Companies Act, 2013, and registered with the Registrar of Companies in Bangalore, Karnataka, India. Cloudium India is a wholly owned subsidiary of Cloudium Technologies plc, with 100% of its equity share capital held directly by the Target.
Cloudium India employs approximately 2,400 individuals at its facilities in Bangalore, primarily engaged in research and development activities and customer support operations in support of Cloudium's global cloud-native enterprise resource planning ("ERP"), customer relationship management ("CRM"), and business-intelligence software-as-a-service ("SaaS") solutions. Cloudium India does not independently market, sell, license, or distribute products or services to third-party customers in the Indian market. Its function within the Cloudium corporate group is that of an intra-group service entity, providing captive R&D and support services to its parent and affiliates on a cost-plus basis in accordance with applicable transfer pricing regulations.
From a financial perspective, Cloudium India's revenues consist predominantly of intra-group service fees charged to Cloudium Technologies plc and its affiliates pursuant to intercompany service agreements. Cloudium India's external (third-party) revenue generated within India is minimal — consisting principally of incidental income from interest, subleasing, and similar items — and is not material to the enterprise-level or group-level threshold analysis set forth below. Based on financial information provided by Cloudium's counsel, Ridgeway Phelps & Sato LLP, Cloudium India's total assets in India as of its most recent audited financial statements (for the fiscal year ended March 31, 2023) were approximately INR 420 crore (approximately $50 million), and its total turnover in India for the same period was approximately INR 850 crore (approximately $102 million). We note that the vast majority of this turnover represents intra-group service fees and would, even under the most expansive interpretation of the applicable thresholds, remain well below the relevant CCI filing triggers.
C. Acquirer.  The acquiring entity is Solara Digital Infrastructure Fund VI LP ("Fund VI"), a Delaware limited partnership, acting through its general partner, Solara Fund VI GP LLC, a Delaware limited liability company. Fund VI is the sixth in a series of flagship private equity funds managed by Solara Digital Infrastructure LP ("Solara" or "SDILP"), a leading technology-focused private equity firm headquartered at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801.
Solara's general partner is Solara Digital GP LLC, a Delaware limited liability company. The firm's managing partners are Marcus Elliston (Founder & Managing Partner) and Priya Narasimhan (Co-Managing Partner & Chief Investment Officer), both of whom are United States citizens and residents. Solara manages approximately $38 billion in assets under management across six flagship funds and several co-investment vehicles, with an investment focus on enterprise software, cloud infrastructure, data analytics, and SaaS platforms.
Critically for purposes of the Indian regulatory analysis, Solara does not currently have existing operations in India. None of Fund VI's current portfolio companies (which, as of the date of this memorandum, consist of five platform investments in North America and Europe) maintain material assets, employees, or operations in India, and none generate turnover in India. Accordingly, the Solara/Fund VI group does not independently satisfy any India-specific asset or turnover thresholds under the Competition Act.
III. Competition Commission of India (CCI) Analysis
A. Legal Framework — Competition Act, 2002
India's competition law regime is principally governed by the Competition Act, 2002, which established the Competition Commission of India as the country's competition regulator. Sections 5 and 6 of the Competition Act govern "combinations" — a term that encompasses mergers, acquisitions, and amalgamations of enterprises — and impose a mandatory pre-closing notification requirement where prescribed asset and/or turnover thresholds are met.
Section 5 of the Competition Act defines the circumstances under which a transaction constitutes a "combination" by reference to a series of quantitative thresholds based on the assets and turnover of the parties to the transaction, both within India and globally. These thresholds are structured to capture only those transactions that involve enterprises of sufficient economic significance within India to warrant review by the CCI.
Section 6(2) of the Competition Act provides that no person or enterprise shall enter into a combination that causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India, and further provides that any person or enterprise proposing to enter into a combination must give notice to the CCI in the form and manner prescribed by the CCI's regulations within the prescribed timeframe. Under the current regime, the parties must notify the CCI and observe a waiting period before consummating the transaction, unless the transaction falls below the applicable thresholds or qualifies for an exemption.
The procedural aspects of CCI merger notification are governed by the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, as amended most recently in 2023 (the "Combination Regulations"), which prescribe the notification forms (Form I for a short-form filing and Form II for a long-form filing), the information to be provided, and the applicable timelines for CCI review. The CCI must form a prima facie opinion within 30 working days of receiving a complete notification (in the case of a Form I filing) as to whether the combination is likely to cause an appreciable adverse effect on competition, failing which the combination is deemed approved.
For purposes of the present analysis, however, the threshold question is whether the transaction constitutes a notifiable "combination" under Section 5 in the first instance. As set forth below, it does not.
B. Filing Thresholds — Section 5 Analysis
Section 5 of the Competition Act establishes three sets of thresholds, any one of which, if met, would render the proposed transaction a notifiable "combination." The applicable threshold figures set forth below reflect the most recent amendments as notified by the Ministry of Corporate Affairs in 2023. We analyze each set of thresholds in turn.
1. Enterprise-Level Thresholds (Target — Cloudium India).  Under Section 5(a) of the Competition Act, a transaction constitutes a combination if the enterprise being acquired (or the enterprise over which control is being acquired) has either:
(a) assets in India exceeding INR 2,500 crore (approximately $300 million at current exchange rates); or
(b) turnover in India exceeding INR 7,500 crore (approximately $900 million at current exchange rates).
For purposes of this analysis, the relevant "enterprise" is Cloudium India, the Indian subsidiary that will come under the indirect control of Fund VI as a result of the transaction.
As noted in Section II.B above, Cloudium India is primarily an R&D and customer support services center operating on a cost-plus basis within the Cloudium corporate group. Based on information provided by Cloudium's counsel, Cloudium India's total assets in India are approximately INR 420 crore (approximately $50 million), which is substantially below the INR 2,500 crore asset threshold. Similarly, Cloudium India's total turnover in India — consisting predominantly of intra-group service fees with negligible third-party revenue — is approximately INR 850 crore (approximately $102 million), which is well below the INR 7,500 crore turnover threshold.
Conclusion: The enterprise-level thresholds are not met for Cloudium India standing alone. Neither the asset prong nor the turnover prong of the enterprise-level test is satisfied.
2. Group-Level Thresholds (Cloudium Group / Tarvex Group).  Under Section 5(b) of the Competition Act, a transaction may also constitute a combination if the "group" to which the target enterprise belongs satisfies certain higher thresholds. The group-level thresholds have both an India-specific component and a combined worldwide-plus-India component.
India-Specific Group Thresholds:
(a) Group assets in India exceeding INR 10,000 crore (approximately $1.2 billion); or
(b) Group turnover in India exceeding INR 30,000 crore (approximately $3.6 billion).
Cloudium's only operating entity in India is Cloudium India. The Cloudium group does not maintain any other subsidiaries, branches, joint ventures, or other entities in India. Accordingly, the Cloudium group's total assets and turnover in India are attributable solely to Cloudium India and, as established above, fall well below these group-level India-specific thresholds.
Combined Worldwide-Plus-India Group Thresholds:
Section 5 also prescribes an alternative set of group-level thresholds that combine a worldwide component with an India-specific component. Both the worldwide prong and the India-specific prong must be satisfied simultaneously for these thresholds to be triggered:
(a) Group assets worldwide exceeding $750 million (or equivalent in INR) AND assets in India exceeding INR 2,500 crore; or
(b) Group turnover worldwide exceeding $2.25 billion (or equivalent in INR) AND turnover in India exceeding INR 7,500 crore.
With respect to the worldwide component, Cloudium's global last-twelve-months ("LTM") revenue was approximately $1,620,000,000 for the fiscal year ended September 30, 2023, and the aggregate deal value of $6.8 billion suggests that Cloudium's enterprise value and global assets may well exceed the worldwide prongs of these thresholds. However, the worldwide component alone is insufficient. Both prongs — the worldwide component and the India-specific component — must be satisfied simultaneously. As demonstrated above, Cloudium India's assets in India (approximately INR 420 crore) do not exceed INR 2,500 crore, and its turnover in India (approximately INR 850 crore) does not exceed INR 7,500 crore. Because the India-specific prong is not met under either the asset or turnover formulations, the combined worldwide-plus-India group thresholds are not triggered, regardless of whether the worldwide component would otherwise be satisfied.
Conclusion: The group-level thresholds are not met for the Cloudium group/Target group.
3. Acquirer-Side Thresholds.  The same threshold structure set forth above — encompassing both enterprise-level and group-level thresholds, with India-specific and combined worldwide-plus-India components — applies to the acquiring group. Under Section 5(c) of the Competition Act, a transaction constitutes a combination if the acquirer (or the group to which the acquirer belongs), taken together with the target, satisfies the prescribed thresholds.
As noted in Section II.C above, Solara Digital Infrastructure LP does not have existing operations in India. Fund VI has no portfolio companies with material Indian assets or turnover. The Solara/Fund VI group's assets in India are nil, and its turnover in India is nil. Accordingly, the acquirer-side India-specific thresholds are not met under any formulation.
Even when the assets and turnover of the target group (Cloudium, including Cloudium India) and the acquiring group (Solara/Fund VI) are aggregated for purposes of the combined entity test under Section 5(c), the India-specific components remain unsatisfied, as the only India-attributable figures arise from Cloudium India and, as demonstrated, fall below the applicable thresholds.
Conclusion: The acquirer-side thresholds are not met.
C. De Minimis / Target Exemption (2017 Notification)
Even if the primary thresholds under Section 5 were met (which, as demonstrated above, they are not), the transaction would independently qualify for exemption under the de minimis target exemption established by the Ministry of Corporate Affairs' notification dated March 27, 2017 (subsequently extended and currently in effect).
Under this notification, a transaction is exempt from the mandatory notification requirement where the target enterprise has:
(a) assets in India of less than INR 350 crore (approximately $42 million); or
(b) turnover in India of less than INR 1,000 crore (approximately $120 million).
The de minimis exemption is framed in the disjunctive — satisfaction of either prong is sufficient to claim the exemption. Cloudium India's assets in India (approximately INR 420 crore) exceed the INR 350 crore asset threshold by a modest margin; however, Cloudium India's turnover in India (approximately INR 850 crore) is below the INR 1,000 crore turnover threshold. Because the exemption requires satisfaction of only one of the two prongs, and the turnover prong is satisfied, the transaction qualifies for the de minimis target exemption.
We note that the de minimis exemption applies regardless of the size of the transaction globally or the size of the acquirer. It is intended to exclude from mandatory review those transactions where the target's Indian operations are below a de minimis level of economic significance, and it provides an independent and self-standing basis for exemption that does not require any filing with or confirmation from the CCI.
Conclusion: The de minimis target exemption would independently apply to exempt this transaction from CCI notification, even if the primary Section 5 thresholds were otherwise triggered.
D. CCI Conclusion
Based on the foregoing analysis, no mandatory CCI notification is required in connection with the proposed acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP. The transaction does not constitute a notifiable "combination" under Section 5 of the Competition Act, 2002, for the following independent and reinforcing reasons:
1.  Enterprise-level thresholds not met. Cloudium India's assets and turnover in India fall below all applicable enterprise-level thresholds under Section 5(a) of the Competition Act.
2.  Group-level thresholds not met. The Cloudium group's total assets and turnover in India (attributable solely to Cloudium India) fall below the group-level India-specific thresholds, and while the worldwide component of the combined worldwide-plus-India thresholds may be satisfied, the India-specific component is not, and both must be met simultaneously.
3.  Acquirer-side thresholds not met. Solara and Fund VI have no operations, assets, or turnover in India, and accordingly the acquirer-side India-specific thresholds are not satisfied under any formulation.
4.  De minimis target exemption independently available. Even if the primary thresholds were otherwise met, the transaction would qualify for the de minimis target exemption under the Ministry of Corporate Affairs' 2017 notification, as Cloudium India's turnover in India is below INR 1,000 crore.
No action is required with respect to the CCI in connection with the closing of this transaction.
IV. Indian FDI Analysis
A. Legal Framework
India's foreign direct investment regime is governed by a multi-layered framework consisting of (i) the Foreign Exchange Management Act, 1999 ("FEMA"), the principal statute governing foreign exchange transactions in India; (ii) the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (the "NDI Rules"), issued under FEMA, which set out the detailed rules applicable to equity investments by persons resident outside India in Indian entities; and (iii) the Consolidated FDI Policy, issued periodically by the Department for Promotion of Industry and Internal Trade ("DPIIT") of the Ministry of Commerce and Industry, Government of India, which consolidates all prior FDI policy pronouncements, press notes, and circulars into a single reference document. The currently applicable version is the 2020 Consolidated FDI Policy Circular, as updated by subsequent press notes and notifications.
Under this framework, foreign direct investment in India may be received through one of two routes:
(i) Automatic Route: No prior government approval is required. FDI is permitted subject only to compliance with the applicable sectoral conditions (if any) and post-facto reporting to the RBI within the prescribed timelines. The vast majority of sectors in the Indian economy are open to FDI under the automatic route, and the IT/software sector — the sector relevant to this analysis — is among them.
(ii) Government Route: Prior approval from the concerned administrative Ministry or, as applicable, from DPIIT (acting through the Foreign Investment Facilitation Portal) is required before the FDI can be effected. Sectors subject to the government route include defense (above certain thresholds), telecommunications, media and broadcasting, multi-brand retail, and certain other sensitive sectors. Investments from countries sharing a land border with India are also subject to the government route in certain circumstances, as discussed below.
The distinction between the automatic route and the government route is fundamental to the FDI analysis, as it determines whether the transaction requires prior regulatory approval or merely post-closing reporting compliance.
B. Sectoral Analysis — IT / Software
Cloudium India operates in the information technology and software sector. Its principal activities in India consist of providing research and development services and customer support operations for Cloudium's global portfolio of cloud-native ERP, CRM, and business-intelligence SaaS solutions. It does not engage in any restricted or regulated activity in India — it does not operate in the telecommunications, defense, media, financial services, or any other sector that is subject to FDI caps or government route requirements.
Under the Consolidated FDI Policy and the NDI Rules, the information technology and software sector permits 100% FDI under the automatic route, with no sectoral cap, no conditions of prior government approval, and no performance requirements or other restrictions. This treatment has been consistently maintained across successive iterations of the Consolidated FDI Policy and reflects India's long-standing policy of encouraging foreign investment in the IT sector as a driver of economic growth and technological development.
Because Cloudium India operates exclusively in the IT/software sector and no other sector that would be subject to different FDI treatment, the sectoral analysis is straightforward: the full extent of Fund VI's indirect ownership of Cloudium India post-closing — 100% — is permissible under the automatic route without any requirement for prior government approval.
C. Downstream Investment and Change of Control
The proposed transaction involves what is characterized under the Consolidated FDI Policy as a "downstream investment" scenario. Cloudium India is an Indian company with 100% foreign equity ownership (held by its parent, Cloudium Technologies plc). The transaction does not involve a direct investment into Cloudium India — no new shares of Cloudium India are being issued, and no consideration is being paid directly to or by Cloudium India. Rather, the indirect foreign ownership of Cloudium India changes as a result of the change in control of its parent, Cloudium Technologies plc, from its current dispersed public shareholders to Fund VI.
Under the Consolidated FDI Policy (including guidance articulated in Press Note 3 of 2020, as amended), downstream investments by companies that are "owned or controlled" by persons resident outside India are treated as indirect foreign investment and must comply with the applicable sectoral conditions — including any sectoral caps and route requirements — that would apply to a direct foreign investment in the same sector.
The analytical consequence is as follows: Because the IT/software sector permits 100% FDI on the automatic route, the downstream change of control resulting from Fund VI's acquisition of Cloudium Technologies plc does not trigger a requirement for prior government approval. The change in the ultimate beneficial ownership of Cloudium India — from the dispersed public shareholders of Cloudium to Fund VI — is permissible without any prior approval from DPIIT, the RBI, or any other Indian governmental authority.
However, certain post-closing reporting and compliance obligations will arise, as follows:
(a) RBI Reporting — Form FC-TRS / FC-GPR: In the case of an indirect transfer of shares resulting from a change in control of the foreign parent, the applicable Indian entity is required to report the transaction to the RBI. If any new share issuance occurs at the level of Cloudium India (which is not anticipated here), Form FC-GPR would be the applicable form. In the absence of a new share issuance, the reporting obligation may be satisfied through Form FC-TRS or through a general reporting mechanism, depending on the specific circumstances and the RBI's then-current guidance. The deal team should coordinate with Cloudium India's local Indian counsel to determine the precise reporting form applicable to this indirect transfer scenario.
(b) Annual Return on Foreign Liabilities and Assets (FLA): Cloudium India is required to file the annual FLA return with the RBI, reporting its foreign liabilities and assets as of the end of each fiscal year (March 31). This is a standing annual obligation and is not specific to the transaction, but the change in ultimate beneficial ownership should be reflected in the next FLA filing following closing.
(c) Beneficial Ownership Information — Registrar of Companies: Under the Companies Act, 2013, and the Companies (Significant Beneficial Owners) Rules, 2018, Cloudium India is required to maintain and file updated information regarding its significant beneficial owners with the Registrar of Companies. The change in ultimate beneficial ownership resulting from Fund VI's acquisition of Cloudium will need to be reported in accordance with these rules.
These are reporting obligations and compliance filings — they do not constitute approval requirements and do not impede or condition the closing of the transaction. They should be completed within the prescribed timelines following closing to avoid any regulatory non-compliance.
D. Press Note 3 of 2020 — Restrictions on Investments from Bordering Countries
Press Note 3 of 2020, issued by DPIIT on April 17, 2020, and subsequently incorporated into the NDI Rules, imposes additional restrictions on foreign direct investment where the beneficial owner of the investment is situated in, or is a citizen of, a country that shares a land border with India. The countries currently sharing a land border with India are: China, Bangladesh, Pakistan, Nepal, Myanmar, Bhutan, and Afghanistan.
Under Press Note 3, an entity of a bordering country, or a beneficial owner of an investment who is situated in or is a citizen of a bordering country, may invest in India only through the government route — i.e., with prior approval from the competent authority — regardless of the sectoral route otherwise applicable. This restriction was introduced primarily in response to concerns about opportunistic acquisitions of Indian companies during the economic disruption caused by the COVID-19 pandemic and has been widely understood as targeting, in particular, investments with Chinese beneficial ownership.
The restriction under Press Note 3 applies not only to direct investments by entities from bordering countries but also to indirect investments where the beneficial owner is situated in or is a citizen of a bordering country. Accordingly, if any significant beneficial owner of Fund VI were an entity from (or a citizen of) a bordering country, the Press Note 3 restriction could potentially be triggered, even though Fund VI itself is a Delaware limited partnership.
We have analyzed the applicability of Press Note 3 to the proposed transaction as follows:
•  Solara Digital Infrastructure LP is a Delaware limited partnership.
•  Fund VI (Solara Digital Infrastructure Fund VI LP) is a Delaware limited partnership.
•  The general partners of Solara and Fund VI — Solara Digital GP LLC and Solara Fund VI GP LLC, respectively — are Delaware limited liability companies.
•  The managing partners of Solara — Marcus Elliston (Founder & Managing Partner) and Priya Narasimhan (Co-Managing Partner & Chief Investment Officer) — are United States-based individuals. Based on information available, Ms. Narasimhan, while of Indian descent, is a U.S. citizen and is not a citizen of any country sharing a land border with India.
•  Based on representations received from Solara, no limited partner of Fund VI is an entity situated in, or a citizen of, any country sharing a land border with India. In particular, Solara has represented that no Chinese governmental entities, Chinese state-owned enterprises, or entities controlled by Chinese beneficial owners hold limited partnership interests in Fund VI.
Important qualification: The composition of Fund VI's limited partner base is a factual matter on which we have relied on representations from Solara. If any limited partners of Fund VI are entities from bordering countries (particularly China, given the practical significance of Press Note 3), further analysis would be required to determine whether such limited partners hold interests of sufficient magnitude and character to constitute "beneficial ownership" for purposes of the Press Note 3 restriction. We recommend that the deal team obtain a final written confirmation from Solara, in the form of a representation or certificate delivered prior to closing, that no limited partners of Fund VI are entities situated in or citizens of any country sharing a land border with India, or, if any such limited partners exist, that their interests do not rise to a level that would trigger Press Note 3.
Conclusion: Based on information currently available, the Press Note 3 restrictions on investments from bordering countries do not apply to the proposed transaction.
E. FDI Conclusion
Based on the foregoing analysis, no prior FDI approval is required from DPIIT, the RBI, or any other Indian governmental authority for the downstream change of control of Cloudium India resulting from the proposed acquisition of Cloudium Technologies plc by Fund VI. The conclusions supporting this determination are as follows:
1.  Sectoral route — automatic. The information technology and software sector, in which Cloudium India operates, permits 100% FDI under the automatic route, with no sectoral cap and no requirement for prior government approval.
2.  Downstream investment — compliant. The downstream change of control of Cloudium India is permissible under the Consolidated FDI Policy and the NDI Rules, as the applicable sectoral conditions (100% automatic route) are satisfied.
3.  Press Note 3 — not triggered. Based on representations from Solara, neither Fund VI nor its beneficial owners are situated in or citizens of any country sharing a land border with India, and accordingly the Press Note 3 restrictions do not apply.
4.  Post-closing reporting obligations. Certain post-closing reporting obligations to the RBI (including FLA returns, beneficial ownership updates, and applicable Form FC-TRS filings) will need to be completed in the ordinary course. These are administrative compliance obligations and do not constitute conditions to or impediments to closing.
V. Interaction with Other Regulatory Workstreams
For completeness, we note that separate memoranda prepared by other members of the Calderwood & Harkness deal team and by co-counsel address the following parallel regulatory analyses applicable to the proposed transaction. None of these parallel regulatory matters affects the conclusions reached in this memorandum with respect to Indian CCI and FDI requirements:
•  Hart-Scott-Rodino Antitrust Improvements Act (United States): A filing under the HSR Act is expected to be submitted on or about February 9, 2024. The HSR analysis and pre-filing strategy are addressed in a separate HSR Pre-Filing Memorandum prepared by the Calderwood & Harkness antitrust team.
•  UK Competition and Markets Authority (CMA): A Merger Notice Form is expected to be submitted to the CMA in February 2024. The CMA has assigned provisional Case No. ME/7184/24 to this matter. The UK merger control analysis is addressed in a separate memorandum.
•  Committee on Foreign Investment in the United States (CFIUS): A voluntary notice to CFIUS is not recommended at this time. The CFIUS analysis is addressed in a separate memorandum dated November 30, 2023.
•  EU Merger Regulation: The EU turnover thresholds under Council Regulation (EC) No. 139/2004 are not met, and accordingly no filing with the European Commission is required. The EU merger control analysis is addressed in a separate memorandum dated December 3, 2023.
•  German Foreign Direct Investment Screening (AWV): No notification obligation under the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung) is triggered, as Cloudium Solutions GmbH (Berlin), Cloudium's German subsidiary, does not operate in a sensitive sector subject to mandatory screening. The German FDI analysis is addressed in a separate memorandum dated December 8, 2023.
The regulatory conditions tracker maintained for this matter should be updated to reflect the conclusions reached in each of the foregoing workstreams. As noted above, India (CCI and FDI) should be marked as "No Filing Required."
VI. Recommendations and Next Steps
Based on the analysis set forth in this memorandum, we recommend the following actions:
1.  No CCI filing required. No action is needed with respect to the Competition Commission of India. The transaction does not constitute a notifiable "combination" under any applicable threshold, and the de minimis target exemption provides an independent and additional basis for exemption. No CCI filing should be included in the regulatory conditions to closing in the definitive merger agreement.
2.  No FDI approval required. No pre-closing application to DPIIT, the RBI, or any other Indian governmental authority is necessary. The downstream change of control of Cloudium India resulting from the merger is fully permissible under the automatic route, and no FDI-related condition to closing should be included in the definitive merger agreement with respect to India.
3.  Post-closing RBI reporting. Following the closing of the transaction, Cloudium India will be required to file certain reports with the RBI, including the annual FLA return, beneficial ownership updates with the Registrar of Companies, and applicable Form FC-TRS or equivalent filings reflecting the indirect change in ownership. We recommend coordinating with Cloudium India's local Indian counsel to ensure that these filings are prepared and submitted within the prescribed timelines. The deal team should include these post-closing compliance items in the integration checklist provided to Fund VI's portfolio operations team.
4.  Confirm beneficial ownership of Fund VI LP interests. We recommend that the deal team request a final written confirmation from Solara — in the form of a formal representation or officer's certificate, to be delivered prior to the signing of the definitive merger agreement — confirming that no limited partners of Fund VI are entities situated in, or citizens of, any country sharing a land border with India (China, Bangladesh, Pakistan, Nepal, Myanmar, Bhutan, or Afghanistan). This confirmation will definitively rule out the applicability of the Press Note 3 restrictions and will provide a documentary basis for the FDI conclusion reached in this memorandum. If any such limited partners are identified, further analysis will be required to assess whether their interests constitute "beneficial ownership" sufficient to trigger the government route requirement.
5.  Update Regulatory Conditions Tracker. India (CCI and FDI) should be marked as "No Filing Required" on the internal regulatory conditions tracker maintained for Matter No. 1041-00003. The tracker should also note the post-closing RBI reporting obligations as a compliance item for the integration workstream.
VII. Limitations and Qualifications
This memorandum is subject to the following limitations and qualifications:
Currency of law. This memorandum is based on Indian law, regulations, and FDI policy as in effect on December 10, 2023. The Indian regulatory framework — including the CCI's filing thresholds, the Consolidated FDI Policy, the NDI Rules, and the press notes issued by DPIIT — is subject to amendment and revision. Changes in law, regulation, or policy occurring between the date of this memorandum and the date of closing of the proposed transaction could affect the analysis and conclusions set forth herein. We will continue to monitor relevant developments and will supplement or revise this memorandum if warranted by any material change in the applicable legal framework.
Reliance on client information. We have relied on information provided by the client (Solara Digital Infrastructure LP and Solara Digital Infrastructure Fund VI LP) and by Cloudium's counsel (Ridgeway Phelps & Sato LLP) regarding Cloudium India's assets, turnover, and business activities in India, including the financial figures referenced in this memorandum. We have also relied on representations from Solara regarding the composition of Fund VI's limited partner base and the absence of beneficial owners from countries sharing a land border with India. We have not independently verified these figures or representations. If any of the factual assumptions underlying this analysis prove to be incorrect or materially different from those on which we have relied, the conclusions of this memorandum may be affected, and we should be consulted.
Scope of practice. Calderwood & Harkness LLP is not admitted to practice Indian law. This memorandum represents our analysis based on our understanding of the applicable Indian regulatory framework, informed by our extensive experience with cross-border transactions involving Indian subsidiaries and by our review of the relevant statutes, rules, regulations, and policy circulars. This memorandum should not be construed as a formal opinion on Indian law. For definitive advice on Indian law — including, without limitation, the precise form and timing of post-closing RBI filings and beneficial ownership disclosures — we would recommend engaging qualified Indian counsel (such as a member of the Indian bar admitted to practice before the relevant Indian courts and regulatory authorities) if any questions or ambiguities arise during the course of the transaction.
Intended recipients. This memorandum is prepared solely for the use of our client, Solara Digital Infrastructure LP and Solara Digital Infrastructure Fund VI LP, and their authorized representatives, in connection with the proposed acquisition of Cloudium Technologies plc. It may not be relied upon by any third party, including Cloudium Technologies plc, Cloudium Technologies India Pvt. Ltd., or any financing source, without the prior written consent of Calderwood & Harkness LLP. This memorandum is protected by the attorney-client privilege, the work product doctrine, and any other applicable privilege or immunity, and its disclosure to any third party is not intended to, and shall not, constitute a waiver of any such privilege or immunity.
Please do not hesitate to contact me with any questions regarding this analysis or if additional information becomes available that may affect the conclusions set forth herein.
Elaine Forsythe Specialist Partner, Antitrust & Competition
Calderwood & Harkness LLP 599 Lexington Avenue, New York, NY 10022 1601 K Street NW, Washington, DC 20006
cc: Harrison Wexford, Partner, Mergers & Acquisitions Beatrice Holloway, Partner, Antitrust & Competition Andrew Fitzpatrick, Senior Associate, Mergers & Acquisitions
Calderwood & Harkness LLP — Privileged and Confidential Attorney Work Product — Matter No. 1041-00003

MEMORANDUM

Record

Parties

Dates

Amounts