India’s National Investment and Infrastructure Fund (NIIF) has made another bid to invest in the country’s airport infrastructure by teaming up with GMR Airports Limited (GAL) to take stakes in airport projects.
NIIF is making a INR6.31 billion (US$76.7 million) investment in the form of Compulsory Convertible Debenture (CCD) in GMR Goa International Airport Limited (GGIAL), a special purpose vehicle to run and operate the New Goa Airport. GGIAL was awarded the concession to develop and operate a second airport in Goa on a Design-Build-Finance-Operate-and-Transfer (DBFOT) basis. In the first phase, Mopa International Airport shall have a design capacity of handling up to 4.4 million passengers per annum, with an ultimate capacity of up to 40 million passengers per annum. In addition to Mopa International Airport, GAL is also developing the upcoming airports in Bhogapuram, Andhra Pradesh, and in Crete, Greece and awaits signing of the concession agreement of Nagpur airport, which is a brownfield project. GAL is part-owned by GIC, which acquired a 15% stake in 2019.
The investment is another attempt by NIIF to invest in the Indian aviation sector, coming three years after the collapse of a joint bid with Canadian public pension fund PSP and the Abu Dhabi Investment Authority (ADIA) to purchase a 79.1% stake in the GVK Group, the operator of Mumbai International Airport, for INR76.1 billion (US$1.07 billion). Instead, the Adani Group conglomerate make a major acquisition, out-manoeuvring NIIF in what was an early setback for the quasi-sovereign fund.
NIIF is a manager that solely invests in Indian infrastructure. The Indian government has 49% stake with the rest held by marquee foreign and domestic investors and multilaterals, including ADIA, Temasek, OTPP, AustralianSuper and AIIB. NIIF is structured in three different funds: Master Fund (the largest infrastructure fund in India), Fund of Funds, and Strategic Fund. The fundraising and objectives of each of the funds is different, but the NIIF team is the same.
NIIF had sought to be a “gateway” for foreign investors in the Indian infrastructure sector, but many have instead chosen to originate their own deals. The biggest single sovereign investor in Indian infrastructure is Singapore’s GIC, which represents around 17% of the US$24 billion of SWF and PPF capital deployed from 2016, followed by NIIF (13%), CPP (11%), CDPQ (7%) and PSP (7%). Indeed, the biggest foreign sources of sovereign investment in Indian infrastructure are Canadian and Singaporean funds, representing a combined 39% and 23%, respectively.
In terms of segments in the Indian infrastructure market, utilities is the biggest target at 27%, principally in the telecommunications sector, followed by renewable energy (25%), roads (17%) and transportation infrastructure, mostly sea ports (17%).
