India’s National Investment and Infrastructure Fund (NIIF) is close to achieving its US$1 billion target for its Fund of Funds following a US$100 million investment by the BRICS-backed multilateral development bank, New Development Bank (NDB).
The FoF, which has raised US$800 million to invest in funds managed by third-party managers, is one of three pools of funding. The Master Fund, which focuses on core infrastructure, recently closed with AUM of US$2.3 billion. The Strategic Opportunities Fund, which targets direct private equity investments, is on course to meet its US$2.1 billion target. The SOF started as a private debt platform with government backing amounting to US$800 million.
The FoF has made commitments to four funds totalling US$370 million, focusing on green energy and climate, middle-income and affordable housing, entrepreneur-driven mid-market growth companies and affordable healthcare. The managers of the four funds have successfully raised over US$1.1 billion equivalent alongside NIIF’s commitments
NDB Vice President and Chief Operations Officer, Xian Zhu, said, “The Covid-19 pandemic has had a deep impact on the Indian economy. NDB’s investment in the NIIF FoF will provide additional funds to Indian private sector businesses facing difficulties during this time of crisis. The partnership with NIIF allows NDB to access to a diversified range of portfolio funds and support the Government of India’s ongoing effort to promote investment in infrastructure. NDB support will address investment gaps and the availability of institutional funding for domestic private equity funds in India, contributing overall to infrastructure development and economic growth.”
Saloni Jhaveri, the head of NIIFL’s investor relations and partnerships, told Global SWF: “We will have an equity pool US$6 billion and bring an additional US$3-5 billion in co-investment. This is a fairly large pool of capital which will have a considerable impact. Together with our platform companies and fund managers, we estimate to have a multiplier effect of 20x total investment on GoI money.”
The NIIF is increasingly seen as a model for other governments, such as the new funds emerging in Indonesia and Djibouti. Jhaveri added: “For anyone seeking inspiration from the NIIF model, here are some of our success factors (i) the 49% stake held by the government at both manager and fund level; (ii)investment decision making on commercial principles at arm’s length to the Government (iii) strong governance framework and ; (iv) freedom to recruit with market linked compensation.”