Cube Highways InvIT Prepares Mega Rs 5,000-Crore OFS as Institutional Giants Line Up for Subscription

Cube Highways InvIT Prepares Mega Rs 5,000-Crore OFS as Institutional Giants Line Up for Subscription​

Cube Highways Trust, a key infrastructure investment trust (InvIT), is set to undergo a significant transformation through its initial public offering (IPO). The InvIT will launch an offer-for-sale (OFS) of units worth Rs 5,000 crore, aiming to transition from a privately listed entity to a publicly traded corporation.

The IPO is scheduled for subscription on July 22. Further details regarding the price band and anchor book opening dates are planned, with the issue closing on July 24. This OFS structure dictates that all proceeds from the sale will be channeled directly to the selling unitholders.

Understanding the Offer-For-Sale Structure​

The offer comprises exclusively an OFS (Offer-for-Sale) of units. It is crucial to note that the InvIT itself will not receive any funds generated by this public offering. The transaction serves as a mechanism for existing unit holders, including institutional and sponsor entities, to monetize their holdings in the trust.

Cube Highways Trust currently manages 27 road assets spread across India, encompassing a total of 8,754 lane kilometers. The InvIT has been listed on stock exchanges since April 19, 2023, following an earlier private placement which successfully raised Rs 5,226 crore.

Institutional and Sponsor Participation in the IPO​

The massive undertaking involves participation from major financial institutions and the associated Cube Group entities. Selling unitholders include BCI IRR India Holdings, an affiliate of Canada's British Columbia Investment Management Corporation (BCI), which plans to offload units worth Rs 811.8 crore.

Seventy Second Investment Company, an investment vehicle managed by the Abu Dhabi government, has also committed to sell units totaling Rs 542.1 crore during the IPO. The sponsor group entities—Cube Highways and Infrastructure and Cube Mobility Investments—are collectively set to sell units worth Rs 3,646 crore.

Strategic Investor Commitment Prior to Listing​

Ahead of the public offering, the InvIT secured substantial commitments from strategic investors. These investors committed a total of Rs 1,250 crore through the allotment of 8.22 crore units at Rs 152 apiece.

Prazim Trading and Investment Company, backed by Azim Premji, stands as the largest pre-IPO strategic investor with a commitment of Rs 950 crore. Other committed investors include HDFC Life Insurance Company and HDFC Pension Fund Management, both committing Rs 100 crore each. Axis Max Life Insurance and WhiteOak Capital REIT & InvIT Alternatives Fund have also pledged Rs 50 crore apiece.

Allocation Mechanics and Investment Backing​

The offering structure dictates that up to 75 percent of the net offer (excluding a designated strategic investor portion) has been reserved for institutional investors. The remaining 25 percent will be made available to non-institutional investors, ensuring broad market access for the units.

The Cube Group is backed by powerful financial entities including I Squared Capital and Mubadala Investment Company. Additionally, backing includes Abu Dhabi Investment Authority-backed Platinum Rock B 2014 RSC and Varese IRR LP (BCI).

Bookrunners and Market Context​

The issue has been assigned to several prominent firms to manage the process effectively. Kotak Mahindra Capital Company, HDFC Bank, HSBC Securities and Capital Markets (India), and JM Financial are serving as the book-running lead managers for this IPO.

Recent market performance provides context for the upcoming offering. On July 14, the InvIT’s units closed at Rs 153.4 on the NSE, marking a slight decline of 2.29 percent.