National Investment and Infrastructure Fund (NIIF)

Context

NIIF has partnered with Japan Bank for International Cooperation (JBIC) in September,2023 to introduce a $600 million India-Japan Fund. The fund's anchor investors will include JBIC and the Govt. of India.

Historical Background of NIIF

1. The National Investment and Infrastructure Fund (NIIF) were created as a platform to aggregate funds from diverse sources for investing in the nation's infrastructure development.
2. The need arose from domestic banks' incapacity to provide extended capital for infrastructure projects with prolonged gestation periods.
3. The Department of Economic Affairs approved the Fund, officially registered under SEBI Category II Alternative Investment Fund rules in 2015.
4. Oversight is provided by the Governing Council, led by the Finance Minister.

Objectives of National Investment and Infrastructure Fund

1. Raising funds through various instruments, including offshore credit-enhanced bonds.
2. Attracting anchor investors for partnership.
3. Ensuring proper servicing of investors and approving companies and projects for investments.
4. Investing in Asset Management Companies (AMCs) created for private equity.
5. Providing advisory services and preparing a shelf of infrastructure projects.

Different Types of NIIF Funds

1. Investment Mandates
   • NIIF funds invest in infrastructure assets and related businesses, covering areas like energy, transportation, housing, water, and waste management.
2. Fund Mandates
   • Master Fund: Invests in mature businesses in core infrastructure sectors, building a diversified portfolio.
   • Fund of Funds: Invests in infrastructure and related funds managed by experienced fund managers, emphasizing green infrastructure and other sectors.
   • Strategic Investment Fund: Focuses on growth and development-stage investments in large-scale projects.

Major Investors of NIIF

1. International and Domestic Support:
   • NIIF's first investment deal of $1 billion with ADIA marked the entry of international investors.
   • The Indian Government holds a 49% share, with domestic investors like HDFC Bank, Axis Bank, ICICI Bank, and Kotak Mahindra Life.
   • Asian Infrastructure Investment Bank (AIIB) committed to investing $200 million, with further investments planned.
2. Investment Policy of NIIF
   • NIIF, as the largest infrastructure-focused fund, addresses significant risks and issues confronting global investors.
   • Its longer horizon and distinct investment objectives set it apart, avoiding short-term approaches often seen in private equity firms.
   • NIIF operates as a link between the government and the business sector on policy concerns.

Role of NIIF in Economy Building

• • NIIF plays a pivotal role in the economy by:
    • Catalyzing the realization of Gati Shakti, the National Master Plan for Multi-modal Connectivity.
    • Providing essential funds for the capital-constrained infrastructure sector.
    • Enhancing the liquidity of infrastructure projects.
    • Alleviating banks from the necessity to lend long-term funds, addressing the asset-liability mismatch in the banking sector.

Facts About National Investment and Infrastructure Fund (NIIF)

Particulars	Details
Established in	2015
Established under	SEBI Regulations
Controlling Ministry	Investment Division, Department of Economic Affairs
Types of Funds under NIIF	Master funds, Fund of funds, and strategic investment funds
Controlling Ministry	Ministry of Finance
Corpus	Six billion

 

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