NIIF may pick up stake in infra financing PSUs

Government is considering a proposal to dilute its stake in a host of infrastructure financing institutions such as REC, PFC and IIFCL through the newly created National Investment and Infrastructure Fund (NIIF).
"It is at a very preliminary stage. Among various things, the Finance Ministry is also looking at a issue if NIIF can pick up stake in state-owned entities that are into infrastructure financing," official sources said.
A sub-fund of NIIF could pick up stake in companies like Rural Electrification Corporation (REC), Power Finance Corporation (PFC) and India Infrastructure Finance Company Ltd (IIFCL), sources said.
This will help ease pressure on the government to finance infrastructure as their holding will come down and divestment will free capital which is to be used for other purposes, sources added.

The government in December had set up the Rs 40,000 crore NIIF, which is an investment vehicle for funding commercially viable greenfield, brownfield and stalled projects.
While the government will invest Rs 20,000 crore in NIIF, another similar amount will come from private investors.

The government is in consultation with several sovereign funds and pension funds from Russia, Singapore, the UK and the UAE to participate in the NIIF registered as category II Alternate Investment Fund with a proposed series of funds.
The government currently is in the process of appointing chief executive of India's maiden sovereign wealth fund.
The Investment Management Company would be responsible for taking investment decision of NIIF corpus.

The Finance Ministry in October had constituted a search- cum-selection Committee under the Chairmanship of Economic Affairs Secretary Shaktikanta Das for selecting a CEO for the Investment Management Company under the NIIF.
The governing council of the NIIF would have government representatives and experts in international finance, eminent economists and infrastructure professionals. It could include representatives from other non-government shareholders.