Singapore-based Cube Highways and Infrastructure Pte. Ltd, a portfolio company of infrastructure-focussed private equity firm I Squared Capital, has agreed to buy five road assets from Dilip Buildcon Ltd as it continues to expand its India business.
Cube Highways will buy five under-construction hybrid annuity road projects in Maharashtra, Telangana and Odisha, it said in a statement. These projects cover nearly 1,200 lane-kilometers of national highways.
Following the transaction, Cube Highways will have 18 projects that cover more than 6,000 lane-kilometers of highways across India in its portfolio. These include nine hybrid annuity projects with a total of 2,015 lane-kilometers of roads, said Gautam Bhandari, director at Cube Highways and managing partner at I Squared Capital.
The completion of the transaction is contingent upon the fulfilment of customary regulatory and lender approvals.
In a separate statement, Mumbai-listed Dilip Buildcon said the total equity valuation of the five projects is likely to be around Rs 702 crore. This is based on the required equity share capital and promoters' unsecured loans of Rs 568 crore.
The amount may change depending on prevailing bank interest rates, inflation and other factors when the projects start commercial operation.
Cube Highways may also invest up to 49% of the required equity of the projects via optionally convertible debentures during the construction period, subject to certain conditions. In such case, Dilip Buildcon will not make additional equity investment in these projects and the equity valuation of the projects will drop to around Rs 409 crore.
lnfrastructure Advisors Pvt. Ltd, a Mumbai-based infrastructure-focussed advisory firm, advised Dilip Buildcon on the transaction.
The transaction adds to the raft of deals that Cube Highways has struck over the past couple of years to expand its India portfolio.
In March, Cube Highways agreed to acquire the Delhi-Agra toll road project from the Anil Ambani-led debt-laden Reliance Infrastructure Ltd for a little over $518 million. The deal helped Cube Highways gain control of the heavily trafficked six-lane 180 km road that connects the national capital to Agra, home to the world renowned Taj Mahal.
In May, Cube Highways struck its second-biggest deal yet when it decided to buy a 39% stake in the Ghaziabad-Aligarh Expressway from Bharat Road Network Ltd for $263 million. And last month, it signed a pact to buy a project from Hyderabad-based KNR Constructions Ltd.
Miami, Florida-based I Squared set up Cube Highways in a tie-up with International Finance Corporation (IFC), the World Bank’s private-sector investment arm, about four years ago. It roped in two more investors later—Abu Dhabi Investment Authority in November 2017 and a consortium led by Japan’s Mitsubishi Corp the following month.