Cube Highways Trust exploring conversion to public InvIT

Most private equity firms have shown a preference for the private InvIT route given a lighter regulatory regime for such vehicles. 

Cube Highways Trust, currently structured as a private infrastructure investment trust, is exploring the idea of converting to a public InvIT, which could see it launch an initial public offering, people aware of the matter told Moneycontrol.

If Cube Highways goes through with the plan, it will be the first privately structured InvIT in the country to convert to a public trust and launch an IPO, sources said.

The plan is at an exploratory stage and no firm decision has been taken, the sources said, adding that the idea is to increase the trust’s sources of funding and to allow access to a larger pool of investors for meeting future capital requirements.

Cube InvIT, sponsored by global infrastructure investor I Squared Capital, is one of the biggest InvITs in the country holding a group of 25 road assets with an aggregate length of 1,940 kilometre, spread across 12 states.

The trust counts prominent global investors such as Abu Dhabi sovereign wealth fund Mubadala and Canadian pension fund British Columbia Investment as its shareholders.

In April 2023, Cube Highways Trust raised Rs 5,225.8 crore (approximately $630 million) from Mubadala, British Columbia Investment and others.

On February 8, Cube Highways announced the acquisition of two roads from National Investment and Infrastructure Trust for an enterprise value of Rs 4,184 crore.

Emails sent to Cube Highways Trust had not elicited a response till the time of publication.

An InvIT, which holds operating infrastructure assets such as toll roads, renewable projects or transmission lines, are yield generating investment vehicles, which distribute the cash flows from the underlying infrastructure projects to shareholders.

Under SEBI norms, InvITs can be of two types — a “public” InvIT or a “private” InvIT.

The units of private InvIT are also listed on a stock exchange but since these vehicles are closely held by a few investors, their units are not traded on a daily basis and are also subject to fewer disclosure norms compared to their “public” counterparts.

Most private equity firms have shown a preference for the private InvIT route given a lighter regulatory regime for such vehicles.

Prominent private equity backed “private” InvITs include KKR’s Highways Infrastructure Trust, Brookfield-owned Altius Telecom Infrastructure Trust, EAAA-sponsored Anzen India Energy Trust and Actis-backed Nxt-Infra Trust.