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The proposed Rs 20,000 cr National Investment and Infrastructure Fund (NIIF), cleared by the Cabinet earlier this week, will be operational and taking investment decisions by December, said Minister of State for Finance Jayant Sinha on Friday.
It will function as a sovereign wealth fund and focus on capital infusion in infrastructure projects. “It will be a commercially oriented enterprise focused on projects which can generate returns, and will be located in Mumbai and operate at arm’s length from the government,” Sinha said at a media briefing.
Adding: “We’ll be hiring the best talent in the world for this institution, so that they can assess and evaluate a variety of investment opportunities using the most sophisticated valuation techniques.”
The government, he said, would ensure it operated like sovereign wealth funds such as Temasek of Singapore and the Green Investment Bank in the UK. Government’s equity in the project will be capped at 49 per cent, the minister said. He clarified the 49 per cent equity will represent Rs 20,000 cr, with the other investors providing additional funds as needed. These would be sovereign wealth funds from other countries, pension funds, and other large institutional investors. Several countries have shown interest, he said.
He added NIIF could create Alternative Investment Funds under itself for various projects, into which foreign direct investment would be allowed. “The financing for projects identified by NIIF would be drop-down, in which funds will be provided as and when required,” he said.
NIIF will have a dual role of equity capital infusion in projects and in getting the due-diligence done for investment in infrastructure projects and have investors available for these, Sinha said. Non-bank financial companies were providing infrastructure financing through debt and equity financing was scarce in India, a gap NIIF would fill.
“We have obviously discussed this with the New Development Bank (the multilateral lender being set up by the BRICS countries, to be headquartered at Shanghai) and we see them as a very valuable partner in being able to invest in these kind of projects. The dual mission is to have a pipeline of projects and attract co-investors as well. We think NDB could be a co-investor,” he said. NDB is expected to begin operations by the coming April.
Sinha said smart cities would be an important area of investment for NIIF. The Fund will be regulated by the Securities and Exchange Board of India.
