Rhodes platform Cube Highways is in the final stages of discussions with Canada’s 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), the two people said.
Cube Highways, the largest road operator promoted by I Squared Capital and International Finance Corp, operates a portfolio of 27 highways comprising 8,400 lane km that will form part of InvIT.
In September Mint first reported that Cube was in talks with BCI and an Abu Dhabi state-backed investor, among others, for fundraising.
“Considering the size of the Cube Portfolio that is being migrated to InvIT, the transaction has taken a long time, but it is now in its final stages and is expected to close soon. One or two in Cube Highway InvIT This will include almost all of its operational road assets, except this. This is by far the largest road portfolio to be placed under an InvIT in India,” said one of the two people above, requesting anonymity.
InvITs drive income-generating infrastructure assets, offering regular returns to investors.
According to the Securities and Exchange Board of India, InvIT has three structures- Listed, Privately Listed and Private Unlisted.
Listed InvITs allow people to invest through an initial public offering, whereas in a private listed InvIT, the units are privately held with investors and subsequently listed on a stock exchange. Private unlisted InvITs are not required to list the entities on the stock exchange, and all disclosures are not required to be made mandatory for the listed entity.
I Squared Capital and Mubadala declined to comment on Mint’s queries. A BCI spokesperson said that he does not comment on market speculation or rumours.
Cube is backed by I Squared Capital, IFC, the 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 Company Ltd and Japan Expressway Company International. Ltd.
Cube is the largest acquirer of operational road projects in India. Its portfolio includes Chenani-Nashri Tunnelway Limited, the largest operating road tunnel in Jammu and Kashmir, which it acquired from IL&FS Transportation Network Limited; 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 that are being set up to hold operational projects in roads, transmission lines, renewable projects, telecom towers and gas pipelines.