Cube Highways Trust completes acquisition of 2 highways in J&K from NIIF for ₹4,185 crore

The National Investment and Infrastructure Fund (NIIF) and Cube Highways Trust (Cube InvIT), which are both managed by Cube Highways Fund Advisors Pvt. Ltd, announced on Thursday the successful transfer of two operational annuity road projects from NIIF to Cube InvIT at an enterprise value of ₹4,185 crore.

The two assets being transferred, Quazigund Expressway Pvt. Ltd (QB) and Athaang Jammu Udhampur Highway Pvt. Ltd (JU), spanning approximately 80km and located in Jammu and Kashmir.

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QB is one of the longest bi-directional tunnels in India, while JU is an essential link between Jammu and Srinagar. These assets have a residual concession life of over six years and are backed by fixed semi-annual annuity payments from the National Highways Authority of India (NHAI), providing stable and predictable cash flows that are insulated from traffic risks.

The total enterprise value (including cash) of the two assets has been reported at ₹4,185 crore, subject to all closing adjustments as specified in the share purchase agreement (SPA), Cube Highways Trust said in a statement.

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"We are pleased to collaborate with NIIF on this important transaction. Today's acquisition will add to the high-quality, pan-India portfolio and enhance the Trust’s exposure to fixed-revenue annuity assets that are unaffected by traffic risks and economic cycles. It also showcases Cube InvIT’s disciplined capital allocation strategy and prudent use of its balance sheet for acquiring de-risked assets with strong fundamentals. This transaction is expected to be accretive to net distributable cash flows by ₹2.3 per unit annually, on average, over the next five years,” Vinay C. Sekar, chief executive officer (CEO) of Cube InvIT, said.

Pankaj Vasani, Group chief financial officer (CFO) of Cube InvIT, said, "The strategic addition of these two completed and revenue-generating annuity assets optimally complements our existing portfolio of assets and grows the annuity exposure. Following this transaction, annuity revenue will account for 33% of Cube InvIT’s total revenue. With a net debt to AUM ratio of 49% (post transaction) and a AAA-rated credit profile from Crisil, Icra and India Ratings, Cube InvIT remains well-positioned to pursue further value-accretive acquisitions.”

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Vinod Giri, managing partner, master fund, NIIF, said this transaction reflects NIIF’s ability to underwrite complex transactions and acquire large infrastructure assets, de-risk them with a comprehensive plan, improve the credit profile, and create value. "These assets strongly reflect the core competency of Athaang, the wholly owned roads platform of NIIF, in managing high-quality infrastructure assets with operational excellence through best-in-class systems and processes. This track record enables us to deliver strong returns and attract global institutional capital.”

Cube Highways Trust is an irrevocable Trust set up under the Indian Trusts Act, 1882 and registered with the Securities Exchange Board of India (Sebi) as an Infrastructure Investment Trust. It is backed by a diversified investor base, including I Squared Capital, a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA), British Columbia Investment Management Corp. and Abu Dhabi’s sovereign investor Mubadala Investment Co.

Cube Highways Trust is engaged in implementing the public-private partnership model in the country’s highways sector to operate and manage highway projects in association with the Union and state governments.