Cube Highways, which is backed by global infrastructure fund I Squared Capital and the International Finance Corp. (IFC), offered ₹5,011 crore to the government for a 30-year concession period. This is against the initial estimated concession value (IECV), or reserve price, of ₹4,995.48 crore set by the NHAI for the road bundle.
The state-run highway developer had put up nine stretches of roads, totaling 566.27km across Uttar Pradesh, Jharkhand, Bihar and Tamil Nadu, in the third round. It had deferred the deadline for bids twice—from mid-September to 31 October—as potential investors sought more time.
National Infrastructure and Investment Fund and IRB Infrastructure Developers also bid for the assets, quoting ₹4,230 crore and ₹3,510 crore, respectively.
A representative for Cube Highways did not respond to requests for comment till press time. A spokesperson for the NHAI could not be reached for comment.
The TOT model is part of the government’s efforts to monetize public infrastructure and build new assets. Under the model, the highest bidder wins the rights to run and maintain operating road assets for 30 years, and earn revenue from toll collection during the period.
Cube Highways is an independent company managing and operating a portfolio of toll roads in India. Based in Singapore, its current shareholders include I Squared Capital, IFC, Abu Dhabi Investment Authority (ADIA) and Japan Highway International.
In September, Cube entered into an agreement with road builder Dilip Buildcon Ltd to acquire five new hybrid annuity road projects in Maharashtra, Telangana and Odisha. The deal increased the company’s portfolio to 18 projects comprising more than 6,000 lane-km of highways across India. Crisil Infrastructure Advisory was the transaction advisor for the NHAI.
With TOT, Cube Highways has become second time lucky. Last December, Cube Highways had bid ₹4,612 crore for the second bundle of TOT auctions. Despite being the highest bidder, its offer was below the NHAI’s expectation of ₹5,362 crore. Subsequently, the NHAI cancelled the second round because of the tepid response.
Adani Enterprises Ltd and IRB Infrastructure were the runners-up in the second bundle.
In the first round in March 2018, Sydney-based infrastructure asset management firm Macquarie Group had won the rights to manage 648km of national highways with a bid of ₹9,681.5 crore, or 1.5 times the IECV.
Even before the bidding for the third round was completed, the NHAI started the process to invite expressions of interest for the fourth round of TOT auctions, as it seeks to meet divestment targets and raise funds for new projects.
The NHAI, which is the nodal agency of the ministry of road transport and highways, has set an initial estimated concession value of ₹4,170 crore for the fourth bundle. Bidding is expected to close by 14 January.
“Because the second round was cancelled, the gap since the first auction (February 2018) has grown," a senior executive at an infrastructure private equity firm said, requesting anonymity. “The NHAI is keen to wrap up the next few rounds quickly."