Cube Highways front runner to acquire NIIF road portfolio for $775 mn enterprise value

Cube Highways frontrunner to acquire NIIF road portfolio for $775 mn

Cube Highways, the I Squared Capital-backed roads platform, has emerged as the front runner to acquire quasi-sovereign wealth fund National Investment and Infrastructure Fund’s (NIIF) maiden roads portfolio - Athang Infrastructure - for an enterprise value of as much as Rs 6,000-6,500 crore (approximately $715-775 million), sources told Moneycontrol.

Moneycontrol reported on June 18 that Cube, Canada Pension Plan Investment Board (CPPIB) and Macquarie Asset Management were in the race to acquire these assets.

Emails sent to NIIF and Cube Highways did not elicit any response.

If concluded, this will be the first exit by NIIF's Master Fund. This will also be the second-biggest road portfolio sale this year, following KKR’s Highway Infrastructure Trust deal to acquire a dozen road projects from PNC Infratech Ltd and PNC Infra Holdings Ltd for a total enterprise value of Rs 9,005.70 crore (approx. $1.1 billion), announced in January.

Sources added that while the initial NIIF plan was to sell the entire portfolio of five roads, the quasi-sovereign fund is now likely to sell only four and will be keeping out the biggest asset in the portfolio - the 73-km Kashi Tollway in Uttar Pradesh that connects Prayagraj and Varanasi, which it won under the Toll-Operate-Transfer (TOT) monetisation programme of the NHAI (National Highways Authority of India) for Rs 3,144 crore in January 2023.

NIIF road portfolio

These operating road assets are housed under Athaang Infrastructure, a company sponsored by NIIF’s Master Fund.

Athaang holds assets with a total road length of over 230 km, spread across north and south India.

Apart from the TOT road mentioned above, the portfolio includes two major assets in Jammu and Kashmir, acquired separately by the fund in 2022 - the 16.3-km Quazigund - Banihal Expressway, acquired from Navayuga Engineering in July 2022, for $380 million (Rs 3,163 crore) and the 64.5-km Jammu-Udhampur Highway acquired by Athaang in August 2022 from the Shapoorji Pallonji Group for $290 million (Rs 2,414 crore).

These projects are among the largest annuity projects awarded by the NHAI.

Other assets include the 60-km Dichpally Tollway in Telangana and the 22-km Devanahalli Tollway in Karnataka, which were acquired from the Essel Group in 2020. The former connects Hyderabad to Nagpur while the latter connects Bengaluru city to its airport.

The roads business of NIIF is housed under its Master Fund, which has a corpus of $2.34 billion, and is backed by marquee investors such as Abu Dhabi Investment Authority, Temasek, Ontario Teachers’ Pension Plan, Australian Super, CPPIB, Public Sector Pension Investment Board, Development Finance Corporation, ICICI Bank Limited, HDFC Group, Axis Bank Ltd and Kotak Life Insurance Company Ltd.

The fund primarily focuses on core infrastructure sectors and has made investments across roads, ports and logistics, renewables and the smart metering space.

NIIF had earlier planned to monetise these roads through an infrastructure investment trust (InvIT), but later decided to sell the assets outright.