Roads platform Cube Highways is in the final stages of discussions with Canadian pension fund British Columbia Investment Management Corp. and Abu Dhabi-based sovereign wealth fund Mubadala to raise $1 billion for its infrastructure investment trust (InvIT), said two people in the know.
Cube Highways, the largest roads operator promoted by I Squared Capital and International Finance Corp, operates a portfolio of 27 highways consisting of 8,400 lane km which will become part of the InvIT.
In September Mint had first reported that Cube was in talks with BCI and an Abu Dhabi state-backed investor, among others, for the fundraise.
“Considering the size of the Cube portfolio, which is being transferred to the InvIT, the transaction has taken a long time, but it is now in the final stages and is expected to be closed soon. Cube Highways InvIT will include almost all its operating road assets, barring one or two. This is the biggest roads portfolio to be put under an InvIT in India so far,” said one of the two people cited above, requesting anonymity.
InvITs run income-generating infrastructure assets, offering investors regular yields.
According to Securities and Exchange Board of India, InvITs have three structures—listed, privately listed and private unlisted.
Listed InvITs allow people to invest through an initial public offering, while in a private listed InvIT, the units are privately held by investors and listed on a stock exchange later. Private unlisted InvITs are not required to list units on a stock exchange, and need not make all the disclosures mandated for a listed entity.
I Squared Capital and Mubadala declined to comment on Mint’s queries. A BCI spokesperson said it does not comment on market speculation or rumour.
Cube is backed by I Squared Capital, IFC, Abu Dhabi Investment Authority, a consortium of Japanese investors such as Mitsubishi Corp., Japan Overseas Infrastructure Investment Corp. for Transport and Urban Development, East Nippon Expressway Co. Ltd and Japan Expressway Co. International Ltd.
Cube is the largest acquirer of operating road projects in India. Its portfolio comprises Chenani–Nashri Tunnelway Ltd, the largest operating road tunnel in Jammu and Kashmir, which it acquired from IL&FS Transportation Network Ltd; and DA Toll Road Pvt Ltd, a six lane toll road connecting Delhi and Agra. It paid $684 million for nine operating roads for a 30-year concession under the toll-operate-transfer model from the National Highways Authority of India.
InvITs are a preferred structure for investors which are being set up to hold operating projects across roads, transmission lines, renewable projects, telecom towers and gas pipelines.