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NIIF gets $2-billion boost from Canadian, Australian funds

FILE PHOTO: A U.S. dollar banknote is seen on top of 50 and 100 Turkish lira banknotes in this picture illustration in Istanbul, Turkey August 14, 2018. REUTERS/Murad Sezer/Illustration/File Photo

The National Investment and Infrastructure Fund (NIIF) on Tuesday said Australia s largest superannuation fund AustralianSuper and Canada s Ontario Teachers Pension Plan have each signed agreements to invest up to $1 billion with the NIIF Master Fund. The agreements include commitments of $250 million each in the Master Fund and co-investment rights of up to $750 million each in future opportunities alongside the Fund, NIIF said in a statement.

This marks the third close of the NIIF Master Fund. AustralianSuper and Ontario Teachers will now join the Government of India (GOI), Abu Dhabi Investment Authority (ADIA), Temasek, HDFC Group, ICICI Bank, Kotak Mahindra Life Insurance and Axis Bank as investors in the Fund, it said.

The NIIF invests in equity capital in the country s core infrastructure sectors with a focus on transportation, energy and urban infrastructure.

AustralianSuper and Ontario Teachers will also become shareholders in National Investment and Infrastructure Fund Ltd, NIIF s investment management company. Domestic investors HDFC Life and Kotak Mahindra Life Insurance have further committed Rs 60 crore in the third round.

With this, NIIF Master Fund becomes the largest infrastructure fund in India with assets under management of over $1.8 billion and a co-investment pool of $2.5 billion, which will enable the Fund to invest at the scale required for the large infrastructure requirements in India, it said. The Master Fund has a tenure of 15 years and is denominated in the Indian rupees to provide long term funding in the infrastructure sector.

NIIF was set up in December 2015 to catalyse funding into the country s core sector. It has a targeted corpus of Rs 40,000 crore to be raised over the years 49 per cent of which will be funded by the government at any given point of time. The remaining 51 per cent of the corpus is to be raised from domestic and global investors, including international pension funds, sovereign wealth funds, multilateral/bilateral investors.

NIIF Managing director and chief executive officer Sujoy Bose said, AustralianSuper and Ontario Teachers are among the most respected infrastructure investors in the world and bring considerable global perspective and value to NIIF. Their significant investments demonstrate the international interest in Indian infrastructure and reconfirms the many strengths of NIIF, which positions it as one of the primary Indian pooling vehicles for global capital.

Explained

Fresh investments timely as Rs 20 lakh crore needed for infra each year

The National Investment and Infrastructure Fund (NIIF), co-owned by the government and private sector, securing long term funding from Australian and Canadian retirement and pension funds comes at critical time as the economy is generally facing funding shortage for the private sector. Fresh investment in the NIIF, which was set up in 2015 to catalyse long term investments, will significantly help improve financing, as India requires Rs 20 lakh crore worth of investments in the infrastructure sector each year.

Dale Burgess, senior managing director (infrastructure and natural resources) of Ontario Teachers , said, NIIF s investment strategy aligns with the long-term and partner-oriented investing approach, we have successfully used in other regions.

Mark Delaney, chief investment officer with AustralianSuper, said India s burgeoning infrastructure market is among the largest in Asia, which presents many opportunities for investment and a strong pipeline of investible projects.

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.

Apart from the Master Fund, the Green Growth Equity Fund (GGEF) is the first investment of NIIF s Fund of Funds. NIIF and the UK Government have committed GBP 120 million each into the Fund. NIIF also has investment in the ports, logistics and real estate sectors, among others. As per government estimates, India requires Rs 20 lakh crore worth of investments in the infrastructure sector each year.