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Cube Highways plans to sell 7 highway projects

Singapore-based Cube Highways & Infrastructure, an investment arm of I Squared Capital, plans to sell seven highway projects spanning 516 kilometers to monetize its road assets. The assets include one BOT asset and six hybrid annuity model assets, with a total revenue of ₹860 crore in FY23.

Cube Highways & Infrastructure, an investment arm of global infrastructure fund I Squared Capital, plans to monetise some of its road assets by selling seven highway projects spanning 516 kilometres (2,200 lane km), multiple people aware of the development said.Cube has hired Ambit Capital to run the sale process and feelers have already been sent to leading investors and strategic investors, the sources said.

They did not share any estimated sale value. The assets on the block include six hybrid annuity model (HAM) assets and one BOT (build-operate-transfer) asset. They reported a total revenue of ₹860 crore in FY23.

Cube Highways – the largest roads operator in India with a portfolio of 27 highways spanning nearly 8,400 lane km – had originally planned to transfer these assets with a right of first offer (ROFO) into its private infrastructure investment trust (InvIT), the sources said.

Backed by I Squared Capital, ADIA and International Finance Corp, Cube had raised ₹5,225 crore ($630 million) last year from investors including British Columbia Investment Management Corporation and Abu Dhabi’s sovereign investor Mubadala Investment through its private InvIT.

The road assets on the block are spread across Andhra Pradesh, Maharashtra, Telangana and Tamil Nadu.

In Maharashtra, Cube is selling two HAM assets – the 52-km Borgaon-Watambare Highways and 56-km Mangalwedha Solapur Highways – which are part of NH-166 connecting the south-western region of the state.

In Telangana, it plans to sell 49-km Mangloor Highway connecting Mangloor to Telangana-Maharashtra border section of National Highway-161 and another 47 km-long stretch of NH-161 from Ramsanpalle to Mangloor. NH-161 is part of the economic corridor under Bharatmala Pariyojana scheme.

Assets on the block in Tamil Nadu and Andhra Pradesh include the 39-km Trichy to Kallagam road and the 61-km Chittoor to Mallavaram road, respectively. Both these assets with a concession period of 15 years were acquired from Hyderabad-based KNR Constructions in 2018.

The single BOT road asset that Cube wants to monetise is the 212-km Narketpally Addanki Medarametla Expressway (Namel) spread across Andhra Pradesh and Telangana, where the 24-year long concession agreement is signed with road development corporations of both the states.

This expressway is the shortest route that connects Hyderabad to the port cities of Chennai and Nellore. Vehicles bound for important commercial centres around Hyderabad and those for central and northern India from Chennai have to necessarily pass through Namel.

The road clocked revenue of ₹250 crore in FY23 (up 28% year on year) due to increase in traffic – which is dominated by commercial traffic as per a recent India Ratings report – and around 15% increase in toll rate starting April 2022.

Cube Highways acquired 100% stake in Namel from Ramky infrastructure and IL&FS Transportation Networks in December 2018.

Cube Highways and Infrastructure III Pte had acquired five hybrid annuity road projects including two in Maharashtra and Mangloor Highways in Andhra Pradesh from Dilip Buildcon in 2019.

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