18 months of infra fund: no foreign investor and not one investment

The NIIF was set up with a targeted corpus of Rs 40,000 crore over the years— 49 per cent of this amount to be funded by the government and the remaining to be raised from domestic and global investors, including international pension funds, sovereign wealth funds, among others.

Written by Sunny Verma | New Delhi | Published:June 3, 2017 5:20 am

The ambitious National Investment and Infrastructure Fund (NIIF), which was set up in December 2015 to catalyse funding into the country’s core sector, has so far not made a single investment in any project. The NIIF has also not received a single penny till late last month from any overseas sovereign wealth fund or any international/domestic investors, despite the government having been in discussions with them for nearly one and half years now.

The NIIF was set up with a targeted corpus of Rs 40,000 crore over the years— 49 per cent of this amount to be funded by the government and the remaining to be raised from domestic and global investors, including international pension funds, sovereign wealth funds, among others.

The Finance Ministry, responding to queries from The Indian Express under the Right to Information Act, said that the NIIF is yet to start investing in infrastructure projects and has got no investment from any foreign investors or sovereign wealth fund till late last month. “As on date, no loan has been extended by NIIF,” the Ministry said in its RTI reply dated May 23.

The government has been in discussions with sovereign wealth funds and pension funds from countries including the UAE, Singapore, Russia and the UK for pitching funds for the NIIF. While the government did sign MoUs with Abu Dhabi Investment Authority (ADIA), Qatar Investment Authority (QIA) and Rusnano OJSC of Russia, these have so far not resulted into subsequent investment from these wealth funds into the NIIF.

“As on date, no foreign/overseas investor, sovereign wealth fund, has put in money in the NIIF,” the Ministry said.

In the last financial year, the NIIF received a total of Rs 15 crore from budgetary resources for meeting administrative expenses.

Even as the government has held multiple discussions with overseas investors especially from Middle East nations, it was not immediately clear why there was no investment commitment so far from this region that has large sovereign funds. The Finance Ministry did not reply to queries from The Indian Express seeking further comments.

Speaking at the India Investment Summit in February 2016, Shaktikanta Das, former Secretary, Department of Economic Affairs, had said that in the year of 2016-17 and thereafter, NIIF will be the major driving force for investment in India’s infrastructure sector. Das had said that NIIF can “emerge as a major vehicle to bring lot of foreign investment for infrastructure in India”.

On April 5, 2017, India and the UK had announced the launch of a Green Growth Equity Fund to leverage private sector investment from London to invest in green infrastructure projects in India. The two countries had, in principle, agreed to anchor investments up to £120 million each (total £ 240 million) in the joint fund, which will be established under the NIIF framework, the Ministry said. This could be the first set of overseas investment that may flow into India under NIIF, which aims to invest in greenfield, brownfield and stalled infra projects.

The NIIF examined a number of projects for investment in the power, green energy and road sectors but no investment was made. For the current financial year, the government has allocated Rs 1,000 crore as per Budget Estimates to NIIF. The government expects NIIF to raise Rs 8,000 crore from various sources to fund projects worth Rs 16,000 crore in the current financial year, according to the Output Outcome Framework for Schemes 2017-18.

In the budget 2016-17, the government reduced the budgetary allocation for NIIF from Rs 4,000 crore as per Budget Estimates (BE) to Rs 1,000 crore in Revised Estimates (RE) for the same year. Of the Rs 1,000 crore allocation as per RE, the government transferred Rs 15 crore to the NIIF for the financial year 2016-17. “NIIF would be putting in matching funds (49 per cent) of investment on receipt of co-investment made by sovereign/quasi-sovereign/multilateral/bilateral investors. However, as on date a sum of Rs 15 crore has been transferred to NIIF for meeting the administrative/pre-operative expenses,” the Finance Ministry said.

NIIF was registered with the Securities and Exchange Board of India as a Category II Alternate Investment Fund on December 28, 2015. The fund has been set up as a fund of funds structure with an aim to generate risk adjusted returns for its investors alongside promoting infrastructure development. In June 2016, the government appointed Sujoy Bose as CEO of NIIF Ltd. Bose was earlier Director and Global Co-Head, Infrastructure and Natural Resources at International Finance Corporation.

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