Asian Development Bank to invest $100 million in NIIF's fund of funds

Asian Development Bank (ADB) will now join the Government of India (GOI) and Asian Infrastructure Investment Bank (AIIB) as an investor in one of the instruments of National Investment and Infrastructure Fund (NIIF) of India. 

ADB will invest $100 million equivalent in the NIIF Fund of Funds (FoF). With ADB’s investment into the NIIF platform, the FoF has now secured $700 million in commitments.

NIIF's FoF is targeted at India-focused PE fund managers who rely on international investors for large-scale fundraising as domestic institutions such as Indian pension funds and insurance companies have not been significant investors in PE funds.  

"Mid-market entrepreneur-led companies are the backbone of most growth sectors in India and are responsible for millions of jobs. These companies are hungry for growth equity, and efficient allocation of capital to them, tied-in with good governance, highest environmental, and social standards and strong business principles, is an imperative," said a NIIF statement today. 

NIIF FoF was established in 2018 with the objective of creating a vehicle to provide India-focused private equity fund managers with a go-to institutional investor operating at scale and based in India. 

The FoF invests in a variety of sectors and strategies through third-party managed funds. So far, it has made commitments to three funds aggregating to over Rs 2,600 crores ($350 million). The three funds are focused on green energy and climate; middle-income and affordable housing and entrepreneur-driven mid-market growth companies, operating across diversified sectors. Additionally, the managers of the three funds have raised $1.1 billion equivalent alongside NIIF’s investments, demonstrating the institution’s ability to crowd-in capital besides its own investments.

According to Sujoy Bose, managing director & chief executive officer, NIIF, said, “ADB’s commitment to NIIF Fund of Funds during these extraordinary and challenging times is highly meaningful. It reflects ADB’s confidence in the continued growth and potential of the Indian economy, its skilled private equity fund managers and the large pool of determined entrepreneurs who seek capital to grow and strengthen their companies."

ADB has been an investor in India-focused PE funds for over two decades and this investment also highlights NIIF’s approach to partner with high-quality institutional investors who are not just providers of capital but are also contributors of expertise during NIIF’s period of development, said Bose. "With this capital infusion, the FoF will be able to increase its support to India-focused PE fund managers at a time when their global fundraising prospects may be challenging in the short term.”

Diwakar Gupta, ADB vice-president, private sector and public-private partnerships, said, “ADB’s investment in NIIF will help catalyze institutional capital into domestic private equity funds in India, thereby contributing to greater availability of long-term growth financing for private sector companies and leading to the creation of quality jobs, social infrastructure development, and economic growth.”

NIIF anchored by the Union Government is a joint investment platform for international and Indian investors with a mandate to invest equity capital in domestic infrastructure. It manages over $4 billion of capital commitments across three funds, each with its distinct investment strategy.

The funds have investment mandates to invest in infrastructure assets and related businesses that are likely to benefit from the long-term growth trajectory of the Indian economy.