NIIF IFL to tap family offices to issue Rs 1,500 cr preference shares

It's also gearing up to secure up to Rs 3,500 crore through non-convertible debentures

Infra debt fund NIIF Infrastructure Finance Limited (NIIF IFL) plans to raise up to Rs 1,500 crore through its maiden issue of preference shares to family offices and wealth management funds.

These long-term non-convertible instruments qualify as Tier-II capital of the institution to meet regulatory norms for capital adequacy.

Shiva Rajaraman, Chief Executive, NIIF IFL told Business Standard the issuance would help to channel funds from new classes of investors - family offices, wealth funds, and high-net-worth individuals. A family office is a unit run by professionals that manages family assets and needs. Some examples of family offices in India are Premji Invest, Nilekani and L&T's A M Naik.

While these are investors looking for long-term investment avenues, infrastructure projects need long-tenor funds through loans or refinancing, reflecting the long gestation of projects.

Rajaraman said non-convertible redeemable preference share (NCRPS) issuances can be structured to provide better returns to investors for a “AAA instrument”, while at the same time providing a low-cost solution to the issuer that is an Infra-debt fund.

Separately, NIIF IFL will also raise up to Rs 3,500 crore through non-convertible debentures to carry out refinancing operations. It carries an “AAA” rating from CRISIL.

NIIF IFL is a non-banking finance company with key investors National Infrastructure Investment Fund holding 39.7 per cent stake and the Indian government holding about 25 per cent.

NIIF IFL is well-capitalised for growth with a healthy capital adequacy of 24.2 per cent, well above the Reserve Bank of India’s requirement of 15 per cent.

Its loan book has grown by around 24 per cent year-on-year (Y-o-Y) to Rs 22,118 crore as of March 31, 2024 from Rs 17,839 crore.

An infrastructure debt fund-non-banking financial company (IDF-NBFC) is permitted to refinance investment-grade projects in both Public-Private Partnership (PPP) and non-PPP infrastructure projects that have completed at least one year of satisfactory commercial operations.

As against a regulatory requirement, the company’s portfolio is seasoned with projects having an average of over five years of satisfactory operations.

NIIF IFL Ltd’s large proportion of assets will continue to be primarily in the renewable energy segment (solar, wind, hydro), which is a strategic focus area for the company. It will also continue to lend to sectors like transport, logistics, and communication, according to CRISIL.