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National Investment and Infrastructure Fund

Focus: GS III: Indian Economy

Why in News?

Finance Minister has urged the National Investment and Infrastructure Fund (NIIF) to expand its operations and explore ways to crowd in private capital for projects under the National Infrastructure Pipeline, PM Gati Shakti and National Infrastructure Corridor.

What is NIIF?

  • The National Investment and Infrastructure Fund (NIIF), which was established in February 2015, is India’s first sovereign wealth fund dedicated to investing in infrastructure.
  • It was proposed to be established as an Alternative Investment Fund to provide long tenor capital for infrastructure projects with an inflow of 20,000 crore from the GoI, with the goal of maximising economic impact primarily through infrastructure investment in commercially viable projects, both Greenfield and Brownfield.
  • It was listed with SEBI as an Alternative Investment Fund in Category II.

Types of funds in NIIF

  • Master Fund: It 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 Opportunities Fund: It is registered as an Alternative Investment Fund II under SEBI in India. Its objective is to invest largely in equity and equity-linked instruments. It has been established to provide long-term capital to strategic and growth oriented sectors in the country with the aim to build domestic leaders.

Functions of NIIF

  • Fund raising through suitable instruments including off-shore credit enhanced bonds, and attracting anchor investors to participate as partners in NIIF;
  • Servicing of the investors of NIIF.
  • Considering and approving candidate companies/institutions/ projects (including state entities) for investments and periodic monitoring of investments.
  • Investing in the corpus created by Asset Management Companies (AMCs) for investing in private equity.
  • Preparing a shelf of infrastructure projects and providing advisory service

December 2023