Cube Highways InvIT Fixes ₹151-152 Price Band for ₹5,000-Cr IPO Valued at ₹20,430 Cr

Cube Highways Trust has fixed a price band of ₹151-152 per unit for its ₹5,000-crore IPO, valuing the infrastructure investment trust (InvIT) at ₹20,430 crore while heading to the public markets with ₹1,250 crore of commitments already secured from marquee institutional investors. The price band was set on July 15.

Meanwhile, the IPO will open for public subscription on July 22 and close on July 24, while the anchor book for institutional investors will open for a day on July 21.

The I-Squared Capital-sponsored InvIT has approached the capital markets to convert from a privately listed infrastructure investment trust into a publicly listed InvIT through an offer for sale.

Premji Invest Leads Pre-IPO Backing

Ahead of the public offer, Cube Highways has already secured commitments worth ₹1,250 crore from strategic investors. Azim Premji-backed Prazim Trading and Investment Company will subscribe to 6.25 crore units for ₹950 crore, making it the largest institutional backer.

Secondly, HDFC Life Insurance Company and HDFC Pension Fund Management will invest ₹100 crore each, while Axis Max Life Insurance and WhiteOak Capital REIT & InvIT Alternatives Fund will put in ₹50 crore each.

Altogether, these five investors will subscribe to 8.22 crore units at ₹152 per unit the upper end of the price band. The strategic investor portion accounts for 25% of the overall offer, with units locked in for 180 days from the date of listing.

No Fresh Capital for Trust

Meanwhile, the offer comprises an offer for sale of units worth up to ₹5,000 crore by existing unitholders. BCI IRR India Holdings and Seventy Second Investment Company, along with sponsor entities Cube Highways and Infrastructure and Cube Mobility Investments, are the selling shareholders. The InvIT will not receive any proceeds from the transaction.

In April 2023, Cube Highways Trust raised more than ₹5,200 crore through its private placement at an offer price of ₹100 per ordinary unit.

The merchant bankers managing the Cube Highways Trust IPO are Kotak Mahindra Capital Company, HDFC Bank, HSBC Securities and Capital Markets (India), and JM Financial.

One of India's Largest Toll Portfolios

As of March 31, the portfolio comprised 27 road assets spanning 2,005 km. Following the expiry of the Western UP Tollway concession in June, the trust currently operates 26 assets spanning 2,005 kilometres or 8,754 lane kilometres, across 12 states.

The portfolio includes major stretches such as Andhra Pradesh Expressway, Delhi-Agra, Ghaziabad-Aligarh, Farakka-Raiganj Highways, Jaipur-Mahua, Mahua-Bharatpur, N.A.M. Expressway, Nelamangala-Devihalli, Narketpally-Addanki-Medarametla, Kanyakumari-Etturavattam Tollway, and Walayar Vadakkencherry Expressways.

Whereas, the trust also owns toll-operate-transfer projects covering Hazaribagh-Ranchi, Lucknow-Raebareli, Jhansi-Lalitpur, Kotwa-Muzaffarpur and sections of the Madurai-Kanyakumari corridor.

Additionally, its annuity portfolio includes the Jammu-Udhampur and Quazigund highway projects, besides six hybrid-annuity road assets in Maharashtra, Telangana, Andhra Pradesh and Tamil Nadu.

Hence, the portfolio had an aggregate enterprise value of about ₹36,842 crore and a weighted average residual concession life of 18 years as of March. Toll assets accounted for around 85% of assets under management, with annuity projects making up the remaining 15%.

Nevertheless, the IPO of Cube Highways comes at a time when infrastructure investment trusts have emerged as a preferred route to monetise mature road assets while offering investors long-term and yield-generating opportunities.

Although, the strong participation of institutional investors even before the start of the issue suggests confidence in the asset class, but the real test will be whether public investors share this optimism as India's infrastructure financing history moves towards the InvIT model.