First NIIF investment: To set up $3-billion platform with DP World

The National Investment and Infrastructure Fund (NIIF) made its first investment, partnering with DP World to create an investment platform for ports, terminals, transportation and logistics businesses in India, the finance ministry said in a statement on Monday. “The platform will invest in opportunities in the ports sector, and beyond sea ports into areas such as river ports and transportation, freight corridors, port-led special economic zones, inland container terminals, and logistics infrastructure including cold storage,” the government said.
“The platform will invest up to $3 billion of equity to acquire assets and develop projects in the sector,” DP World said in a separate statement. It said the partnership follows the memorandum of understanding (MoU) signed in May 2017 and the visit to India of Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and DP World Group Chairman and CEO Sultan Ahmed bin Sulayem in February 2016.

“Efficient logistics and cargo movement are critical components for the continued growth and development of the Indian economy, and particularly the manufacturing sector. We are delighted to partner with DP World to create a platform which will aim to reduce the cost of moving cargo between port and origin/destination. This is NIIF’s first investment and is a good example of how NIIF can work with international capital and expertise to invest at scale to build critical infrastructure in India,” said NIIF CEO Sujoy Bose.

Sultan Ahmed bin Sulayem said, “We believe that our expertise in building best-in-class logistics infrastructure together with the NIIF’s local knowledge and government partnership is the right combination to take advantage of the significant growth opportunities in India.”

Last October, the government secured an investment commitment of up to $1 billion from Abu Dhabi Investment Authority (ADIA), which would become the first institutional investor in the NIIF Master Fund and a shareholder in the Fund’s investment management company — the National Investment and Infrastructure Limited.

Apart from ADIA, four domestic institutional investors also be joined the NIIF Master Fund including HDFC Group, ICICI Bank, Kotak Mahindra Life and Axis Bank. 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.

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 NIIF has also signed memorandum of understanding with the government of the UAE, Russia’s RUSNANO and RDIF, the Qatar Investment Authority and the Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development to explore investments in the Fund. A Governing Council chaired by Finance Minister Arun Jaitley has already been set up to act as an advisory council to the NIIF.

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

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