Within a month of investing in the government-sponsored National Infrastructure Investment Fund (NIIF), the Abu Dhabi Investment Authority has picked up stake in Cube Highways, an investment platform of International Finance Corporation and private equity firm I Squared Capital.
Cube is one of the few institutional investment platforms that are present in the highways sector. The deal is one of the first private equity investment in the sector in the last few years. Edelweiss Financial Services were the sole advisors to Cube Highways.
While highway construction is dominated by family run businesses, private sector investment in this space has been subdued. Though the deal size is not officially known, it is believed ADIA will put in $300 million in the Singapore-based company. A definitive agreement between the two sides has been signed.
The first investment agreement between NIIF and a wholly-owned subsidiary of ADIA was signed on October 16 for $1 billion fund infusion. NIIF would eventually have a corpus of $6 billion (Rs 40,000 crore) but the government share in it would be less than 50 per cent in order to keep the ownership non-government.
Shareholders of Cube Highways are looking to invest up to $1 billion in new capital towards the acquisition of additional roads and highways, as well as new platform company investment in areas such NHAI’s Toll-Operate-Transfer (TOT) programme, Hybrid Annuity Model (HAM) and other areas.
Cube Highways owns and operates more than 1,300 lane-kilometers of highways in India. “Cube Highways, which we started from scratch, has built an experienced management team with world class engineering and operational expertise and has now become a recognized leader in the Highways sector in India,” Gautam Bhandari, Director of Cube Highways and partner, I Squared Capital, said. “This new capital commitment comes at a very exciting time, especially following the positive reforms undertaken by NHAI and the Ministry of Road Transport and Highways.”
ADIA manages a global investment portfolio on behalf of Abu Dhabi government across more than two-dozen asset classes and sub-categories.