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Photo: Mint
Photo: Mint

ADB pledges $100 million to NIIF’s Fund of Funds

  • With ADB’s investment into the NIIF platform, the total commitments towards the FoF stand at $700 million
  • In June 2018, AIIB had approved an equity investment of $100 million as part of FoF’s initial closing

MUMBAI : The National Investment and Infrastructure Fund Ltd (NIIF), on Monday said it has received a commitment of about $100 million from the Asian Development Bank (ADB) into the NIIF Fund of Funds (FoF).

With ADB’s investment into the NIIF platform, the total commitments towards the FoF stand at $700 million, which includes investment pledges from the government and Asian Infrastructure Investment Bank (AIIB), NIIF said in a press statement.

In June 2018, Asian Infrastructure Investment Bank (AIIB) had approved an equity investment of $100 million as part of FoF’s initial closing, committing a further investment of $100 million as part of phase II for the final closing.

The Fund of Funds is mandated to invest as an anchor investor in third party fund managers. It can also selectively form joint ventures with fund managers.

“ADB’s commitment to NIIF Fund of Funds during these extraordinary and challenging times is highly meaningful. It reflects ADB’s confidence in the continued growth and potential of the Indian economy, its skilled private equity fund managers and the large pool of determined entrepreneurs who seek capital to grow and strengthen their companies," said Sujoy Bose, managing director and chief executive officer of NIIF.

“ADB has been an investor in India-focused PE funds for over two decades and this investment also highlights NIIF’s approach to partner with high quality institutional investors who are not just providers of capital but are also contributors of expertise during NIIF’s period of development. With this capital infusion, the FoF will be able to increase its support to India-focused PE fund managers at a time when their global fundraising prospects may be challenging in the short term," he added.

Mint reported in December 2019 that New Development Bank (NDB), earlier known as the BRICS Development Bank, was looking to invest $100 million into FoF, which looks to raise up $1 billion to invest in up to 10 private equity funds managed by fund managers in India, according to a August 2019 disclosure on ADB’s website. Its portfolio funds are expected to provide primarily growth capital to firms across sectors, including green infrastructure, affordable housing, manufacturing and services, it said.

Established in 2018, the FoF has made commitments of over 2,600 crores (about $350 million) to three India-focused private equity funds so far, according to a NIIF press statement. These funds are focused on various sectors, including: green energy and climate, middle-income and affordable housing, and entrepreneur-driven mid-market growth companies operating across diversified sectors. Further, the three funds have managed to raise $1.1 billion alongside NIIF’s investments.

“ADB is proud to partner with NIIF in this landmark transaction especially at a time when countries globally, India included, are facing unprecedented challenges. ADB’s investment in NIIF will help catalyze institutional capital into domestic private equity funds in India, thereby contributing to greater availability of long-term growth financing for private sector companies and leading to the creation of quality jobs, social infrastructure development, and economic growth," said Diwakar Gupta, vice-president for private sector and public-private partnerships at ADB.

Envisioned in the Union budget 2015, NIIF was launched as an alternative investment fund in December 2016 with a target corpus of 40,000 crore.

Its investments are diversified across its three funds— Master Fund, Fund Of Funds and Strategic Fund, across which it manages $4 billion of capital commitments.

NIIF is a quasi-sovereign wealth fund, in which the government of India holds 49% equity with the rest held by foreign and domestic investors, is mandated to invest in infrastructure and related sectors that could help fuel economic growth in the country.

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