ADIA bets on I Squared-IFC’s platform; investors commit $1 bn under Cube Highways
Photo Credit: Shah Junaid/VCCircle

Singapore-based Cube Highways and Infrastructure Pte Ltd has signed a pact to sell a minority stake to an entity owned by the Abu Dhabi Investment Authority.

Cube Highways is a joint venture between private equity firm I Squared Capital and International Finance Corp (IFC), the private investment arm of World Bank.

The shareholders of Cube Highways will look to invest up to $1 billion in new capital towards the acquisition of additional roads and highways, as well as new platform company investments in areas such as National Highways Authority of India’s Toll-Operate-Transfer (TOT) programme, Hybrid Annuity Model (HAM) and other areas, ADIA said in a statement. It focuses on 100% buyout or acquisition of majority stakes in the highways it evaluates.

A person privy to the development said ADIA has picked a minority stake for a post-money valuation of $1 billion. An email query sent to the company on the valuation didn't elicit any response immediately. ADIA declined to comment.

A March media report said the company is looking to raise $200 million that would be used to monetise India’s publicly funded national highways.

Cube Highways operates a platform that owns and operates more than 1,300 lane-kilometres of highways in India.

In March, it acquired 100% ownership interest in Andhra Pradesh Expressways Ltd (APEL), an operating annuity road project, from IL&FS Transport Networks Ltd (ITNL).

The other acquisitions made by Cube Highways include Madhucon Agra Jaipur Expressways Ltd for Rs 248 crore and Jaipur Mahua Tollways Pvt. Ltd, which operates a road project in Rajasthan, for Rs 525 crore.

Gautam Bhandari, director of Cube Highways and partner of I Squared Capital, said, “We are pleased to partner with ADIA and IFC to grow our highways portfolio in India. This capital commitment comes at an exciting time especially following the positive reforms undertaken by NHAI and the Ministry of Road Transport and Highways.” Bhandari previously said the company continues to evaluate and acquire select operating highway and transportation assets in India.

I Squared Capital is an investment manager focusing on energy, utilities, telecommunications and transport in the Americas, Europe, and select high growth economies. The firm has offices in New York, Houston, London, New Delhi, Hong Kong and Singapore.

Barclays Investment Bank advised ADIA while Edelweiss Investment Advisors Ltd advised Cube Highways.

Deals in the road segment

Several long-term institutional investors have been acquiring stakes in road projects. Two months ago, Canadian alternative asset manager Brookfield Asset Management acquired two assets worth Rs 1,900 crore (close to $300 million) in the largest private equity buyout deal in the roads sector.

In August 2017, construction firm Dilip Buildcon signed a pact with Shrem Group to sell its stake in 24 road projects for Rs 1,600 crore (around $250 million).

In April 2017, IDFC Alternatives, the private equity arm of infrastructure lender IDFC Ltd, had acquired a majority stake in two road assets from IPO-bound GR Infraprojects Ltd for an undisclosed amount.

In December 2016, Spain’s toll roads operator Abertis entered the Indian market with the acquisition of two road assets from two infrastructure funds jointly managed by India’s largest lender State Bank of India and Australia’s private equity firm Macquarie for €128 million (about Rs 905 crore).

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