Cube Highways Trust, one of India’s largest private-sector toll road operators, is set to launch a block deal worth Rs 1,675 crore (approximately $200 million). The sellers involved in the transaction include Cube Highways and Infrastructure Pte. Ltd., Cube Highways and Infrastructure II Pte. Ltd., Cube Mobility Investments Pte. Ltd., and Cube Highways and Infrastructure I-D Pte. Ltd. The floor price has been set at Rs 120 per unit. The base deal size is approximately $200 million at the floor price, with an option to upsize. The base deal consists of around 139.8 million units, representing approximately 10.8 percent of the total outstanding units Cube Highways Trust has appointed Axis Capital and JP Morgan as investment bankers for the transaction. In a recent development, it was also reported that Cube Highways, the I Squared Capital-backed roads platform, has emerged as the frontrunner to acquire quasi-sovereign wealth fund National Investment and Infrastructure Fund’s (NIIF) maiden roads portfolio, Athang Infrastructure, for an enterprise value of Rs 6,000-6,500 crore (approximately $715-775 million).

Cube Highways Trust to launch block deal worth Rs 1,600 crore

The InvIT is exposed to the risks associated with any further asset acquisition (post seven assets that have been proposed under the tranche 2), which could materially affect its operational and financial risk profile. If Cube InvIT acquires any other asset or raises additional debt in future, ICRA will at that juncture, evaluate the effect of the same on the rating. Also, any regulatory changes that can impact its financial risk profile will remain monitorable. 

Cube InvIT is exposed to the risks inherent in toll road projects, including those arising from cyclicality in traffic growth, inflation-linked toll rate increase, risk of political acceptability of rate hikes over the concession period, the likelihood of toll leakages, development or improvement of alternative routes or alternate modes of transportation.

The issuer has made timely interest payments.

Vinay C Sekar , CEO

The InvIT has a robust cash flow cover, with projected average DSCR of more than 2.0 times and estimated leverage of ~45%. Further, the comfort from structural features, including maintenance of a three months’ debt service reserve (DSR) throughout the loan tenure and provision for cash trap mechanism in case the DSCR falls below 1.25 times, as per quarterly testing at the consolidated level.

The InvIT has a diversified profile with 25 operational road assets including 18 NHAI toll road assets, one NHAI annuity, six NHAI HAM and one state toll project. The cash flows are well diversified, with the top three assets viz. DATRPL, GAEPL and NAMEL, estimated to account for ~33% of the total inflows in FY2025P. Further, the aforesaid asset portfolio has geographical diversification across twelve states, with top three states – the National Capital Region (NCR), Uttar Pradesh, and Rajasthan, constituting ~46% of the total inflows in FY2025P.

Security Name: 7.95% Cube Highways Trust 31 Mar 2044

ISIN:

INE0NR607025

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Cube Highways Trust to launch block deal worth Rs 1,600 crore

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