National Investment and Infrastructure Fund

National Investment and Infrastructure Fund

• National Investment and Infrastructure Fund (NIIF) is a fund created by the Government of India for enhancing infrastructure financing in the country.

• NIIF, proposed to be set up as a Trust, would raise debt to invest in the equity of infrastructure finance companies such as Indian Rail Finance Corporation (IRFC) and National Housing Bank (NHB). The idea is that these infrastructure finance companies can then leverage this extra equity, manifold. In that sense, NIIF is a banker of the banker of the banker.

• The objective of NIIF would be to maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects. It could also consider other nationally important projects, for example, in manufacturing, if commercially viable.

• The functions of NIIF are as follows:

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

• There will be a Governing Council of the NIIF which will have Government representatives and experts in international finance, eminent economists and infrastructure professionals. It could include representatives from other non-Government shareholders. The terms and period of appointment of the Governing Council of the NIIF will be as decided by the Government. The Governing Council will oversee the activities of the Trust and will be constituted as a separate legal entity, if necessary.

• NIIF would be supported by one or more Chief Executive Officers (depending upon the number of funds created) and a small investment team consisting of limited number of expert staff, at arm’s length from the Government. Their salaries would be market-linked. It would be possible for the NIIF Governing Council to appoint one or several Fund Managers.

• NIIF would have full autonomy for project selection. NIIF would formulate guidelines and would follow due processes for selection criteria for AMCs and Non-Banking Financial Companies (NBFCs) / Financial Institutions (FIs). Appropriate rules of bidding including potential conflicts of interest will be worked out.