NIIF signs first investment deal

The government-backed National Investment & Infrastructure Fund signed its first investment deal with Abu Dhabi Investment Authority, which will invest $1 billion.

NIIF was envisaged to be established as one or more Alternative Investment Funds under Sebi Regulations with a corpus of Rs.40,000 crore. Of this, the government's contribution was pegged at 49% of the commitment at any given point of time. “ADIA will become the first institutional investor in NIIF's master fund and a shareholder in NIIF's investment management company,“ the finance ministry said in a statement.

Six domestic institutional investors -HDFC Standard Life Insurance, HDFC AMC, HDFC, ICICI Bank, Kotak Mahindra Old Mutual Life Insurance and Axis Bank -will also join the NIIF master fund along with the Centre, which had conceived the fund a couple of years ago, the ministry said. While the government was in talks with various global investors, including those from Singapore, and long term investors, it had not signed an agreement so far.

A few investors such as the government of UAE, Rusnano, Qatar Investment Authority, RDIF and Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development had signed MoUs with the NIIF. In addition, the government has signed terms for cooperation on the NIIF with the US Treasury and the UK Treasury . An India-UK Green Growth Equity Fund was also announced last April 2017, which will be set up under the fund-of-funds vertical of NIIF, and will have anchor commitments of 120 million pounds each from Indian and British governments. The Indian government's funding will be through NIIF.

While ADIA has been in talks with the government for long, it had concerns related to its earlier investment such as Etisalat's failed at tempt to tap the Indian telecom market. The company was forced to exit India after the 2G controversy led to the cancellation of 122 telecom licences by the Supreme Court.

NIIF has been set up to fund long-term infrastructure projects and reduce the pressure on bank lending, which typically face an assetliability problem, given that they accept a majority of their deposits for two years or so, while power, railway or road projects have a tenure of 20 years or more.

While the government has tried the idea of dedicated funds for infrastructure in the past two, it had limited success. In June 2016, the government had appointed Sujoy Bose as the NIIF CEO. Bose was earlier with the International Finance Corporation, the World Bank's private sector investment arm

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