BackCabinet approves equity infusion of ₹6,000 crore into NIIF
This move will help the entity raise ₹1.10 lakh crore by 2025 for financing infrastructure projectsNIIF’s investment platform is a perfect example of how international and Indian investors can collaborate to provide long-term sustainable investment in the core infrastructure sector, said analyst
PremiumTo drive infrastructure creation in the country, the Union Cabinet on Wednesday approved the infusion of ₹6,000 crore equity in National Infrastructure Investment Fund’s (NIIF’s) debt platform in the next two years. This move will help the entity raise ₹1.10 lakh crore by 2025 for financing infrastructure projects.
"Union Cabinet has approves equity infusion by government of ₹6,000 crores in NIIF Debt Platform sponsored by National Investment and Infrastructure Fund, comprising of Aseem Infrastructure Finance Limited and NIIF Infrastructure Finance Limited," said Union minister Prakash Javadekar.
Out of the proposed amount, ₹2,000 crore will be infused in the current financial year, Javadekar added. "In view of the unprecedented financial situation and availability of limited fiscal space due to the prevailing COVID-19, the proposed amount may be disbursed only if there is readiness and demand for debt raising," the central government said.
"NIIF will take all necessary steps to use the equity investments from domestic and global pension funds and sovereign wealth funds expeditiously," the centre added.
The proposal to invest ₹6,000 crore as equity into NIIF is part of the Aatmanirbhar Bharat 3.0 package announced earlier this month.
“NIIF attracts a lot of sovereign fund for investment in infrastructure-related activities. It also has a debt platform through which it also raises a lot of money and by 2025 it has to provide and infra funding to the extent of ₹1.1 lakh crore national infrastructure pipeline (NIP)," finance minister Nirmala Sitharaman said earlier.
"This is a move to tap the debt market, the potential of which has not yet been optimally utilised. Total funding to the tune of Rs. 1.1 lakh crore would be done to the national infrastructure pipeline comprising both of brown field and green field projects," said Divakar Vijayasarathy, founder and managing partner, DVS Advisors LLP.
The NIIF Strategic Opportunities Fund has set up a debt platform comprising an NBFC Infra Debt Fund and an NBFC Infra Finance Company. NIIF through its Strategic Opportunities Fund (‘NIIF SOF’) owns a majority position in both the companies and has already invested Rs.1,899 crore across the platform.
The Strategic Opportunities Fund (SOF fund) through which the NIIF investment has been made, will continue to support the two companies apart from investing in other suitable investment opportunities.
"This is a welcome move which will go a long way in addressing some of India’s infrastructure debt financing needs especially in light of the national infrastructure pipeline. This will also support in boosting confidence and kick starting post COVID infrastructure investments," said Anjan Dasgupta, Partner, DSK Legal.
"Aseem Infrastructure Finance Limited will help in providing much needed entire project life cycle financing and on the other hand, NIIF IFL will facilitate financing of post COD infrastructure and PPP assets," Dasgupta added.
"The current proposal seeks GOI investment directly to further scale the potential and impact of the two entities in the infrastructure debt financing space. This will also support the efforts of the platform to raise international equity," the Union Cabinet said.
"Anchored by the GOI, NIIF’s investment platform is a perfect example of how international and Indian investors can collaborate to provide long-term sustainable investment in the core infrastructure sector of the country with a focus particularly on renewable power, roads, transmission, logistics and social infrastructure," Dasgupta further mentioned.
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