BCI and Abu Dhabi’s Mubadala Are Anchor Investors in India's Cube Highway Trust
Canadian pension investment manager British Columbia Investment Management Corporation (“BCI”) and Abu Dhabi’s sovereign investor Mubadala Investment Company (“Mubadala”) have become the new anchor investors in Cube Highways Trust (“CHT”), an infrastructure investment trust (“InvIT”) in India.
Cube Highways Fund Advisors Private Limited, the Investment Manager to InvIT, announced the listing of its fully subscribed privately placed ordinary units to INR 52,258.27 million (c. US$630 million). The InvIT has a diversified portfolio of 18 toll and annuity road assets with an aggregate length of 1,423.60 kilometres. BCI, Mubadala and domestic institutional investors have subscribed to the ordinary units.
The first tranche of assets held by the InvIT will have 17 NHAI toll road assets and one NHAI annuity road asset. These road assets are located across 11 states, including Andhra Pradesh, Bihar, Haryana, Jharkhand, Karnataka, Kerala, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal. In addition, pursuant to a right of first offer, CHT will also have an opportunity to access a pipeline of seven highway assets.
Mr. U K Sinha, an independent director at Cube Highways Funds Advisors Private Limited (acting as the Investment Manager for the InvIT), said, “This marks a significant milestone in the development of India’s infrastructure sector and InvIT in particular. 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. I’m thrilled to participate in Cube’s journey towards a more prosperous and sustainable future.”
The InvIT has also signed a facility agreement with the State Bank of India for an amount of INR 100 billion (c. USD 1.2 billion) to be used for refinancing of the existing debt within the initial portfolio.
The InvIT has been rated “Provisional Ind AAA/Stable” for its loan facilities from three rating agencies, including Crisil Ratings Limited, ICRA Limited and India Ratings & Research Private Limited. The ratings derive comfort from the portfolio’s track record and geographic diversification, cash pooling structure, strong debt protection metrics and experienced management team.
Zaman Velji, Senior Managing Director, Infrastructure & Renewable Resources at BCI, said, “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. Additionally, this investment increases and diversifies our exposure in the infrastructure sector, as well as in India, enabling BCI to contribute to national economic growth. We look forward to working with Cube Highways to build long-term value for our public sector clients.”
Saed Arar, Executive Director – Head of Traditional Infrastructure, Mubadala, said, “India offers the most significant global growth opportunity in roads with a robust and well-regulated market for infrastructure investment. With more than $100 billion allocated to the road construction program, and a potential $20bn+ addressable acquisition pipeline, Cube Highways is the most well positioned platform for Mubadala to drive investments in roads and capitalize on this market opportunity. As a responsible investor, we are proud to be working with Cube Highways and supporting India’s road infrastructure ambitions to further deliver socioeconomic benefits to the country.”
About Cube Highways
The Cube Group is a 100% institutionally owned platform backed by a diversified investor base, including I Squared Capital, a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), and Japan Highways International BV. It is engaged in implementing the public-private partnership (“PPP”) model in the country’s highways sector to operate and manage highway projects in association with the central and state governments.
For more information, please visit: www.cubehighwaystrust.com
Media contact: corpcomm@cubehighways.com
About Mubadala Investment Company
Mubadala Investment Company is a sovereign investor managing a global portfolio, aimed at generating sustainable financial returns for the Government of Abu Dhabi.
Mubadala’s $284 billion (AED 1045 billion) portfolio spans six continents with interests in multiple sectors and asset classes. We leverage our deep sectoral expertise and long-standing partnerships to drive sustainable growth and profit, while supporting the continued diversification and global integration of the economy of the United Arab Emirates.
For more information, please visit: www.mubadala.com
This is a big deal for BCI and Abu Dhabi’s Mubadala as India's toll roads offer a great opportunity to invest in a government backed infrastructure through the popular investment trust (“InvIT”) in India.
Cube highways is a wholly owned subsidiary of Abu Dhabi Investment Authority (ADIA), and Japan Highways International BV.
As stated above, the InvIT has a diversified portfolio of 18 toll and annuity road assets with an aggregate length of 1,423.60 kilometres. BCI, Mubadala and domestic institutional investors have subscribed to the ordinary units.
With this deal, BCI joins CPP Investments, CDPQ, PSP Investments, OMERS, OTPP and Brookfield investing heavily in India's toll roads.
Zaman Velji, Senior Managing Director, Infrastructure & Renewable Resources at BCI, states it well:
“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. Additionally, this investment increases and diversifies our exposure in the infrastructure sector, as well as in India, enabling BCI to contribute to national economic growth. We look forward to working with Cube Highways to build long-term value for our public sector clients.”
In other related news, Gideon Scanlon, editor of the Canadian Investment Review interviewed Samir Dhrolia, the BCI’s senior managing director of derivatives, trading and index portfolio management on implementing a centralized trading framework:
In 2018, the British Columbia Investment Management Corp. adopted a centralized trading framework.
The program, which brought together global derivatives and trading with almost $35 billion in equity assets, is managed by Samir Dhrolia, the BCI’s senior managing director of derivatives, trading and index portfolio management.
He joined the organization in 2016 after nearly two decades as a globe-trotting derivatives trader for well-known financial institutions, including Merrill Lynch and Goldman Sachs in New York and HSBC Bank in Hong Kong.
That year, Dhrolia and his wife moved to B.C., her home province, to raise their three children. “B.C was a completely unfamiliar environment. . . . I learned about BCI through a mutual friend who mentioned that they were looking to set up a derivatives program.”
He was attracted by the BCI’s ambition. Under the leadership of Gordon J. Fyfe, its chief executive officer and chief investment officer, the organization planned to become an active in-house asset manager and a centre of thought leadership in the institutional investment sector.
The centralized trading program, which was presented to the board in December 2018 by Daniel Garant, global head of public markets, fit neatly into that vision. “The concept was a big one: a system giving us one wallet and one voice,” says Dhrolia.
Under the program, all trades are performed through a single, centralized hub. In order to do so, a new platform — now known as One Wallet — was developed to collect data from throughout the organization and used by the central trading desk as the nexus of cross-asset class discussions.
Its primary goal is to improve the BCI’s ability to negotiate with external partners by leveraging data. “It’s all about working out what you’re buying from which stores and organizing the shopping cart to ensure you receive the fairest price. By aggregating the basket, you’re offering your partners the chance to secure larger mandates. It’s a win-win.”
With the BCI’s 700 employees working out of offices in Vancouver, Victoria, London and New York, Dhrolia is busy running its 24/7 trading desk, which provides the plan with a central point of control for the organization’s governance and stewardship activities. The new approach, in which all information is available to senior managers across all asset classes, helps mitigate the operational, reputational and legal risks common to more siloed approaches.
One Wallet offers other benefits as well. In its development, the BCI was interested in new ways to consider environmental, social and governance issues across its vanilla indexing ESG portfolio. “By working with the BCI ESG team and quantitative portfolio managers, we were able to explore optimized ways to offer clients ESG exposure, leveraging key relationships in the marketplace established by One Wallet and the centralized trading principle, to ensure smooth trading while offering a single source for information on all of its activities.”
Dhrolia is also able to incorporate lessons he learned at other financial institutions. “I wanted to leverage the skill sets of all the various support groups and make sure we had stakeholder alignment across the firm. Nobody can do all the heavy lifting alone — I was fortunate to have a great team to work with and experts in different asset classes.”
In the four years since the adoption of centralized trading, Dhrolia says it’s proven successful. “It can cut the cost of each transaction down by between 25 and 50 basis points. Given how many transactions we do, that’s a significant saving.”
In line with Fyfe’s strategic vision for the BCI to be a centre of thought leadership, Dhrolia and his team wrote a white paper on their efforts to implement the centralized trading system, outlining how other institutional investors could determine if a similar program was suited to their needs. “All investors can benefit from some aspects of cross-asset centralized trading principles. It might not make sense for a very small firm that only deals in a few products to implement their own framework, but new technology has a habit of changing barriers to entry.
“We have seen what was once only available to Wall Street traders [become] available at the fingertips of any investor.”
Excellent interview with Samir. I already covered BCI's innovative centralized trading platform here.
I'm glad the word is getting out and more institutional investors are reading their white paper.
In other related news, BCI and its partners Macquarie Asset Management and MEAG wer honoured to find out their acquisition of Reden Solar won 2022's Energy Transition Deal of the Year (Europe):
And BCI also announced the opening of its London office to support direct investing in infrastructure:
Lea Dubourg-Hrachovec will be the managing director and head f the London office, bringing a wealth of expertise and experience to this new role.
Lastly, BCI head of Private equity Jim Pittman announced he has relocated to New York City wher ehe will continue to lead and grow BCI's private equity activities:
Glad to hear this Jim, New York is where you need to be to expand BCI's PE activities, sourcing the best deals, working alongside top strategic partners for co-investment opportunities. Good luck, hope you and Lisa enjoy living in in the Big Apple.
By the way, I'm still waiting for BCI to schedule an interview with Lincoln Webb and Jim Pittmann for my blog.
Alright, let me wrap it up.
Below, Rich Heitzmann, FirstMark Capital, joins 'Closing Bell' to discuss the private equity market, the overall state of venture capital and more, stating private equity was severely over-funded in 2020 and 2021.
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