Tamil Nadu aims to attract $33 bn from sovereign and sharia-compliant funds

This comes at a time when the Tamil Nadu Infrastructure Fund declared its first close with a total fund-raising of $350 million

United Economic Forum (UEF) Chamber of Commerce and World Islamic Economic Forum (WIEF) are targeting to attract one per cent of all sovereign wealth fund investments, amounting to $33 billion, into Tamil Nadu.

This comes at a time when the Tamil Nadu Infrastructure Fund (TNIF) declared its first close with a total fund-raising of $350 million.

Speaking at the opening ceremony of the WIEF-UEF Chennai Roundtable 2018, Tamil Nadu deputy chief minister O Panneerselvam said that they (UEF and WIEF) have set a target of attracting one per cent of all sovereign wealth fund investments into Tamil Nadu. Such investments will immensely benefit the state and the society at large.

He asserted that if any state is ready to receive such a large volume of ground investments, it is Tamil Nadu. The state government has already identified over 200 infrastructure projects requiring an investment of around $250 billion.

The deputy CM said Tamil Nadu has institutional structures that can receive investments through sovereign wealth funds and sharia-compliant funds.

The state has established TNIF, the first category-I alternative investment fund established by any state government under Securities and Exchange Board of India (Sebi) regulations.

TNIF provides equity and structured finance to infrastructure projects with a sound revenue model. Tamil Nadu has also received Sebi approval to launch the Tamil Nadu Shelter Fund (TNSF) for investment in affordable housing.

It is a social impact fund that offers investors profits along with achieving social and environmental benefits. Then there is Tamil Nadu Housing Board, a first of its kind fund that has provided seed capital of Rs 1.50 billion as catalytic first-loss capital.

Both TNIF and TNSF are professionally managed with the Tamil Nadu Infrastructure Fund Management Company (TNIFMC) as the fund manager. TNIFMC has worked with government agencies and private promoters to identify projects in industrial parks, green-energy and allied activities.

The first round of funding has been completed, with participation from both local and international investors.

TNIFMC plans to attract more international investment, both for TNIF and TNSF, which has also been registered with Sebi.

"The government, as a promoter, has ensured in-built checks and balances to ensure independent decision-making and alignment of interests of the management team with the fund's success," said the deputy chief minister.

Panneerselvam said Tamil Nadu ranks first among states in terms of the number of factories and industrial workers. The state is known for its strong governance. For the second year in a row, it has maintained its position in the Public Affairs Index-2017 as the state with the best governance in the country.

Panneerselvam said the state has high-quality human resource. To make Tamil Nadu India's innovation hub and knowledge capital, more investment in value-added service industries, research and development and financial technology would be needed.