Cube Highways Trust Secures Rs 1,250 Crore Anchor Commitments Ahead of Mammoth IPO

Cube Highways Trust Secures Rs 1,250 Crore Anchor Commitments Ahead of Mammoth IPO​

Cube Highways Trust is poised for a significant transition as it secures substantial anchor investor commitments totaling Rs 1,250 crore before its forthcoming public listing. This commitment paves the way for the trust to move from a private infrastructure investment trust into a publicly listed InvIT with an anticipated offer size of Rs 5,000 crore. The strategic investments signal strong institutional confidence in the road asset portfolio.

Strategic Investor Lock-ins and Allocation Details​

A distinguished group of marquee investors has committed capital to the trust's offering. This includes Premji Invest, various entities from the HDFC group, Axis Max Life Insurance, and WhiteOak Capital. These commitments are vital for the success of the upcoming IPO scheduled to open on July 22 and close on July 24.

Prazim Trading and Investment Company, an investment vehicle tied to Premji Invest, is set to subscribe to a substantial 6.25 crore units worth Rs 950 crore. This commitment makes them the largest institutional backer in the I-Squared Capital sponsored infrastructure investment trust. HDFC Life Insurance Company and HDFC Pension Fund Management each committed Rs 100 crore to the offering.

Axis Max Life Insurance and WhiteOak Capital REIT & InvIT Alternatives Fund I have also pledged Rs 50 crore each. Collectively, these five strategic investors will take up a total of 8.22 crore units at an allocation price set at Rs 152 per unit. The units allotted to these anchor investors are mandated to remain locked in for 180 days from the listing date.

IPO Structure and Listing Timeline​

The forthcoming issue is defined entirely as an offer for sale of units, amounting up to Rs 5,000 crore. This offering targets existing unitholders, including entities linked to Cube Highways, British Columbia Investment Management Corp, and Abu Dhabi Investment Authority.

As the transaction is solely an offer for sale, Cube Highways Trust will not receive any proceeds from the IPO itself. The core purpose of this move is to transform the trust into a publicly listed InvIT. Details regarding the price band for the IPO are expected to be announced on July 15. The anchor investor bidding round is slated to occur one working day prior to the official offer opening.

Cube Highways Portfolio Assessment as of March 31​

The trust currently manages a diverse portfolio comprising 27 road assets, spanning a total distance of 2,005 kilometres or 8,754 lane kilometres across 12 states. Following the expiry of the Western UP Tollway concession in June, the operational assets stand at 26.

Key stretches within the portfolio include Delhi-Agra and Ghaziabad-Aligarh. Other significant projects encompass Farakka-Raiganj, Jaipur-Mahua, Mahua-Bharatpur, Nelamangala-Devihalli, and Narketpally-Addanki-Medarametla road. The trust also holds toll-operate-transfer projects like Hazaribagh-Ranchi and Lucknow-Raebareli.

The portfolio maintains a strong annuity component with the Jammu-Udhampur and Quazigund highway projects. It also includes six hybrid-annuity road assets spanning Maharashtra, Telangana, Andhra Pradesh, and Tamil Nadu. As of March, the aggregate enterprise value stood at approximately Rs 36,842 crore.

Asset Mix and Concession Life Metrics​

As of March, toll assets constituted around 85 percent of all assets under management within the portfolio. The remaining 15 percent comprised annuity projects. This indicates a strong focus on revenue-generating tolling operations alongside stable annuity income streams.

The trust maintains a healthy weighted average residual concession life measured at 18 years as of March. This metric provides investors with insight into the long-term stability and sustainability of the underlying infrastructure assets managed by Cube Highways Trust.