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Cube Highways, one of India’s largest private sector operators of toll roads, is looking to sell around 25% stake in the company and is also exploring an infrastructure investment trust (InvIT), said two people aware of the development.

Citibank and JPMorgan are advising Singapore-based Cube Highways, which operates 27 highways totalling 8,400 lane km, the people said on condition of anonymity.

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Cube Highways counts private equity firm I Squared Capital, International Finance Corp. (IFC), Abu Dhabi Investment Authority (ADIA), and a group of Japanese investors among its investors.

“The plan being explored is to sell around 25% stake at the holding company level. An InvIT is also being looked at," one of the two people cited above said. InvITs are trusts that manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects.

Cube Highways was IFC’s first investment in the Indian road sector with an equity investment of $100 million to buy operational road projects.

Spokespeople for IFC, Citibank, JPMorgan and ADIA declined to comment.

Queries emailed to the spokespersons for Cube Highways, I Squared Capital and Gautam Bhandari, managing partner, I Squared Capital, on Thursday remained unanswered till the time of publishing this story.

Deal activity in India’s roads space has been picking up. Canada’s Brookfield Asset Management Inc., India’s National Investment and Infrastructure Fund and private-equity firm Actis Llp have bid to buy Ashoka Concessions Ltd in a deal with an implied equity value of around $350 million, Mint reported last month.

The renewed interest comes amid toll collections rising to pre-pandemic levels on account of a rebound in India’s economic activity.

“We have also seen a few look at InvIT as a form to monetize road assets. There has been a healthy bounce back on traffic in most stretches and this has been faster than expected; all this has platformed this class of asset very favourably with long-term infra-aggregators," said Jagannarayan Padmanabhan, practice leader and director of transport and logistics sectors at Crisil Ltd. “There has been a churn of assets in the last 24-36 months. Existing road developers have either sold a significant part of their portfolio or have had stake sale at the holding company level."

India is increasing the pace of awarding highway projects to help kick-start the economy. The government has lined up a large infrastructure capital expenditure plan and has awarded 13,000km length of roads involving an investment of 3.3 trillion under the 5.35 trillion Bharatmala project. It plans to award another 8,500km of roads shortly.

Under the toll-operate-transfer model, investors will have the right to collect toll on select stretches of national highway for a 30-year period against an upfront payment to government.

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