NIIF buys infra debt provider IDFC Infrastructure Finance
The acquisition of IDFC Infrastructure Finance shows NIIF’s ability to make commercially attractive counter-cyclical investments, says NIIF CEO Sujoy Bose
Mumbai: The National Investment and Infrastructure Fund (NIIF) of India has acquired IDFC Infrastructure Finance Ltd (IDFC-IFL), a non-banking financial company that has been registered with the Reserve Bank of India (RBI) as an infrastructure debt fund.
IDFC-IFL lends to operating infrastructure projects, allowing the original project financiers to recycle their capital after the commencement of operations.
The company has a loan book of more than ₹4,500 crore, strong asset quality and no material repayment obligations for the next two years, NIIF said in a statement on Wednesday.
This acquisition is the first investment from NIIF’s Strategic Fund and the first time it took a majority stake in a company.
The acquisition is subject to approval from RBI and customary closing conditions.
“Building on this acquisition will allow NIIF to play a meaningful role in the private debt space in Indian infrastructure, where we see a growing need given India’s infrastructure ambition, an emerging gap as traditional infrastructure lenders consolidate and the potential for attractive returns,” said Sujoy Bose, managing director and chief executive at NIIF.
“The long-term nature of NIIF’s Strategic Fund, its strong governance and underwriting standards, combined with NIIF’s ability to attract capital will allow us to build on a strong platform created by IDFC and to continue to grow the business,” he said.
This investment demonstrates the ability of NIIF to make commercially attractive counter-cyclical investments, since it comes at a time when non-banking financial companies (NBFCs) are facing some temporary headwinds, he added.
The government established the NIIF in 2015 as an investment vehicle to fund commercially viable greenfield, brownfield and stalled infrastructure projects.
The government invests 49% of the corpus and the remainder is to be raised from third-party investors such as sovereign wealth funds, insurance and pension funds and endowments.
NIIF’s mandate includes investing in areas such as energy, transportation, housing, water, waste management and other infrastructure-related sectors in India.
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