National Investment and Infrastructure Fund (NIIF) is India’s first sovereign wealth fund that was set up by the Government of India in February 2015. The objective behind creating this fund was to maximize economic impact mainly through infrastructure investment in commercially viable projects, both Greenfield and Brownfield.
In Union Budget 2015-16, India’s Finance Minister, Arun Jaitley announced the creation of National Investment and Infrastructure Fund. It was proposed to be established as an Alternative Investment Fund to provide long tenor capital for infrastructure projects with an inflow of Rs. 20,000 crore from the Government of India. NIIF was approved in August 2015 by the Department of Economic Affairs. First meeting of its governing council was held in December 2015 further to which it was registered with SEBI as Category II Alternative Investment Fund. In June 2016, Finance Ministry announced that they appointed Mr. Sujoy Bose as Chief Executive Office of National Investment and Infrastructure Fund (NIIF) who was then the director at Infrastructure and Natural Resources, International Finance Corporation (IFC).
As of September 2018, the NIIF manages funds of over US$ 3.4 billion.
NIIF manages three funds: Master Fund, Fund of Funds and Strategic Fund. The funds were set up to make infrastructure investments in India by raising capital from domestic and international institutional investors.
The Master Fund is an infrastructure fund with the objective of primarily investing in operating assets in the core infrastructure sectors such as roads, ports, airports, power etc.
Fund of Funds
The Fund of Funds anchor and/or invest in funds managed by fund managers who have good track records in infrastructure and associated sectors in India. Some of the sectors of focus include Green Infrastructure, Mid-Income & Affordable Housing, Infrastructure services and allied sectors.
Strategic Investment Fund
Strategic Investment Fund is registered as an Alternative Investment Fund II under SEBI in India. The objective of National Investment and Infrastructure Fund II (“Strategic Fund”) is to invest largely in equity and equity-linked instruments. The Strategic Fund will focus on green field and brown field investments in the core infrastructure sectors.
Investors in the Fund
In October 2017, NIIF signed the first investment agreement worth $1 billion with Abu Dhabi Investment Authority (ADIA). After this partnership agreement, ADIA became the first international institutional investor in NIIF’s Master Fund and a shareholder in National Investment and Infrastructure Fund Ltd along with Government of India who became 49% shareholder. Domestic Institutional Investors (DIIs) such as HDFC group, ICICI Bank, Kotak Mahindra Life and Axis bank are also contributors in NIIF’s Master Fund.
In June 2018, Asian Infrastructure Investment Bank announced investment of $200 million in NIIF’s Fund of Funds. The AIIB board agreed on investing $100 million as of now and $100 million at a later stage.
In February 2018, Master Fund created its first platform along with DP World to invest in the ports and logistics sector in India. Together, NIIF and DP world announced investment of $3 billion in the platform. In March 2018, Hindustan Infralog, the joint venture platform between DP World and the National Investment and Infrastructure Fund (NIIF) announced that it bought 90% stake in the logistics firm Continental Warehousing.
In April 2018, NIIF partnered with UK government to launch the Green Growth Equity Fund (GGEF) under its Fund of Funds. to invest in renewable energy, clean transportation, water and waste management and other related sectors in India.
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Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.