Temasek becomes seventh investor in NIIF Master Fund, parks Rs 27.5 bn

NIIF hopes to raise Rs 400 bn across its three funds in the near term namely, Master Fund, Fund of Funds and Strategic Investment Fund

Temasek Holdings, the Singapore based global investment firm, has agreed to invest up to $400 million or Rs 27.5 billion in the National Investment and Infrastructure Fund’s (NIIF) Master Fund, said NIIFs CEO and Managing Director Sujoy Bose at a media roundtable on Thursday.

Temasek is now the seventh investor in the NIIFs Master Fund, after the Government of India, Abu Dhabi Investment Authority (ADIA), HDFC Group, Kotak Mahindra Life Insurance, Axis Bank and ICICI Bank.

The NIIF is essentially a fund manager that is registered with the Securities and Exchange Board of India (Sebi) as an Alternative Investment Fund (AIF). And unlike banks and other financial institutions that provide loans for infrastructure projects, the NIIF is a pure equity investor in companies and projects.

The Government-backed investment company hopes to raise Rs 400 billion across its three funds in the near term namely, the Master Fund, Fund of Funds and Strategic Investment Fund.

The Government’s shareholding in the Master Fund stands at 49 per cent, while the other investors hold 51 per cent. In 2015, the Government allocated Rs 200 billion towards the NIIF in its budget announcement and NIIF raised a matching sum from domestic and international investors.

ADIA’s investment in the Master Fund stands at Rs 68 billion, followed by Temasek with Rs 27.5 billion and domestic financial institutions who have contributed a total of Rs 5 billion in total, Bose said.

The NIIF Master fund will mainly look at investing in operational assets in the core infrastructure areas like roads, ports, airports and energy projects. Essentially the fund will be used to provide a boost for brown-field projects by matching domestic capital requirements with international investors.

So far the Master Fund of NIIF has invested in a large-scale platform for ports, transportation and logistics business with DP World, and has acquired a 90 per cent stake in the Continental Warehousing Corporation. Bose told members of the press that, “The aim is to raise a total of $2.1 billion and more for the Master Fund.”

Apart from the Master Fund, which was set up in July 2017, the NIIF in February of this year launched its ‘Fund of Funds’ to primarily invest in infrastructure projects, affordable housing opportunities as well as renewable energy and other green businesses.

The Fund of Funds is structured so as to pull money from domestic and international investors and channel the investments into sector specific funds that are managed by NIIF. The aim is to raise a total of Rs 70 billion in the Fund of Funds, said Bose.

Under the Fund of Funds, in April NIIF set up its Green Growth Equity Fund (GGEF) with a target to raise GBP 500 million. The GGEF is anchored by NIIF and the United Kingdom Government’s Department for International Development (DFID), both of whom have contributed GBP 120 million, each.  

The NIIF will also be launching a ‘Strategic Investment Fund’ aimed at financing development stage infrastructure projects and companies. These projects will require financing from the ground-up therefore involving large capital outlays and medium-to-long-term investment horizons.

Bose said that the NIIF board will require a couple of months to finalise the structure of the third investment vehicle and thereafter they will rope in the right investors, interested in long-term infrastructure projects.

When asked if the NIIF will contribute capital towards the National Asset Management Company, under Project Sashakt, and if there is any interest in stressed infrastructure and energy (power producers) companies, Bose said, “Right now on the table we are not looking at any distressed funds, but under the Fund of Funds as the fund manager there is nothing stopping us from investing.”

“We are open to invest in distressed funds, but there have to be opportunities that are commercially attractive,” he said.