UAE agrees to fund NIIF

The cabinet approved a pact that will pave the way for canalising a part of $75 billion that the United Arab Emirates (UAE) had promised to invest in India’s infrastructure. The MoU approved by the cabinet provides for investment by UAE in the national investment and infrastructure fund (NIIF), set up earlier this year. The MoU is the second signed with an overseas investor for picking up a stake in NIIF. Russia-backed fund Rusnano had committed to jointly launch with NIIF, a private equity fund that would invest in high technology sectors in India.
UAE is likely to invest in NIIF through the Abu Dhabi investment authority. The country had agreed to pump in $75 billion for expansion of India’s infrastructure, especially railways and ports, in August last year during PM Narendra Modi’s UAE visit.
“The MoU will help establish a transparent and high-level framework and collaboration platform, under which both countries intend to explore ways to facilitate and expand the participation of UAE’s investment institutions in appropriate projects and institutions in India, including NIIF,” a cabinet statement said.
The setting up of NIIF was announced in the Union Budget for this financial year. The government has committed Rs.20,000 crore every year to the fund and said that it will keep its stake in it to below 49 per cent stake.
The rest of the equity would be held by overseas entities like sovereign wealth funds, pension funds and bilateral and multilateral lending agencies. Even domestic pension and insurance funds will be allowed to pick up a stake in NIIF. The initial corpus of NIIF will be Rs.40,000 crore and it will be able to leverage that equity base to raise more funds through debt leverage.

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