Mubadala and Canadian pension fund invest in India's infrastructure investment trust

Cube Highways Trust has a diversified portfolio of 18 toll and annuity road assets with an aggregate length of 1,423.6km

Mubadala Investment Company is a diversified sovereign investors with $284 billion in assets globally. Photo Mubadala

Mubadala Investment Company, Abu Dhabi’s sovereign investor, and the British Columbia Investment Management Corporation, a Canadian pension fund, have become anchor investors in Cube Highways Trust, an infrastructure investment trust (InvIT) in India.

Cube Highways Fund Advisors, the investment manager to the trust, has listed privately placed ordinary units worth 52.26 billion Indian rupees ($636.4 million), which Mubadala, BCI and other domestic institutional investors have subscribed to, Mubadala said on Wednesday.

An infrastructure investment trust is a platform — similar to a mutual fund or a real estate investment trust — that allows direct individual and institutional investment in infrastructure projects.

The trust has a diversified portfolio of 18 toll and annuity road assets with an aggregate length of 1,423.6km in India, Mubadala said without specifying the size of its investment.

“This [investment] marks a significant milestone in the development of India's infrastructure sector and InvIT in particular,” said U.K. Sinha, an independent director at Cube Highways Funds Advisors.

“The trust in Cube by such marquee investors affirms its capability and personnel. The board and Cube’s team are eager to work with all stakeholders to continue generating value and worth for all.”

The infrastructure investment trust has also signed a $1.2 billion credit facility agreement with the State Bank of India, which it will use to refinance the existing debt within its initial portfolio.

“India offers the most significant global growth opportunity in roads with a robust and well-regulated market for infrastructure investment,” said Saed Arar, executive director and head of traditional infrastructure at Mubadala.

“With more than $100 billion allocated to the road construction programme, and a potential $20 billion-plus addressable acquisition pipeline, Cube Highways is the most well-positioned platform for Mubadala to drive investments in roads and capitalise on this market opportunity.”

Mubadala, as “a responsible investor”, will continue to work with Cube Highways and support India’s road “infrastructure ambitions to further deliver socioeconomic benefits to the country”, Mr Arar said.

India’s Cube Group is a platform backed by a diversified investor base that includes I Squared Capital, a wholly owned subsidiary of the Abu Dhabi Investment Authority, and Japan Highways International.

The company invests in India’s transport sector to operate and manage motorway projects in partnership with the central and state governments.

“BCI’s investment in Cube Highways is in line with our long-term strategy of investing in infrastructure platforms that meet the essential needs of the communities they serve,” said Zaman Velji, senior managing director in charge of infrastructure and renewable resources at BCI.

“This investment increases and diversifies our exposure in the infrastructure sector, as well as in India, enabling BCI to contribute to national economic growth.”

Mubadala, which is at the heart of Abu Dhabi’s efforts to diversify its economy, manages more than $284 billion in assets globally.

In recent years, it has stepped up its investment in health care, infrastructure, technology, mobility, clean energy and life sciences, and has teamed up with private equity companies, pension funds and other investors as it expands its portfolio of assets.

In recent years Mubadala has also pivoted to investments in the Asia, particularly in China and India, to tap into their growth potential.

In April last year, a consortium including BlackRock Real Assets and Mubadala invested $525 million in a subsidiary of India’s Tata Power to create the country’s “most comprehensible” renewable energy platform.

In June 2020, Mubadala invested $1.2 billion in Reliance Industries’ Jio Platforms to buy a 1.85 per cent stake, joining investors such as Facebook and KKR ploughing funds into the digital and wireless business in India.

In October of the same year, Mubadala announced an investment of Dh3.1 billion in Reliance Retail Ventures, a subsidiary of Reliance Industries, in exchange for a 1.4 per cent stake.

Last month, the Abu Dhabi Investment Authority invested $500 million in India’s Lenskart, an online retailer for eyewear, becoming one of the largest shareholders in the company.

Mubadala and Adia's recent investments in India are in line with the UAE's push to deepen its trade and economic ties with nations around the globe, particularly Asian economies.

The UAE is working towards signing 26 Comprehensive Economic Partnership Agreements, Minister of Economy Abdulla bin Touq said last month.

The UAE has already signed Cepas with Turkey, Israel, India and Indonesia, and is close to finalising similar agreements with Kenya and Cambodia.

It also announced the start of Cepa negotiations with Vietnam earlier this month.

Non-oil trade between the UAE and India jumped 10 per cent to about $50 billion in one year after the countries signed the economic treaty, putting it on track to achieve its $100 billion bilateral trade goal by 2030, Dr Thani Al Zeyoudi, Minister of State for Foreign Trade, said in February.