The proposed Rs 20,000-crore National Investment and Infrastructure Fund (NIIF) will function as a sovereign wealth fund like Singapore’s Temasek and operate at “arm’s length” from the government, Minister of State for Finance Jayant Sinha said today.
To be operational by the year end, NIIF will primarily focus on fund infusion in infrastructure projects — greenfield, brownfield and the stalled ones.
“It will be a commercially oriented enterprise and will be located in Mumbai and operate at arm’s length from government,” Sinha said.
“We will be hiring the best talent in the world for this institution so that they can assess and evaluate a variety of investment opportunities using the most sophisticated valuation techniques,” he added.
The government, he said, will ensure that NIIF operates like sovereign wealth funds such as Temasek (of Singapore) and the Green Investment Bank in the UK.
Government’s equity in the project will be capped at 49 per cent, he said, adding that the remaining portion will held by large business groups as well as provident fund, endowment and sovereign wealth funds. Several countries have shown interest in the fund, he said.
NIIF will have a dual role of equity capital infusion in projects as well as getting the due diligence done for investment in infrastructure projects and have investors available for them, Sinha said.
“We have obviously discussed this with the New Development Bank and we see them as a very valuable partner in being able to invest in these kind of projects. The dual mission is to have a pipeline of projects and attract co-investor as well. We think the NDB could be a co-investor,” he said.
The New Development Bank, founded by the BRICS nations, is expected to roll out its operations by April 2016.
Sinha said smart cities would be an important area of investment for NIIF. The Fund will be regulated by market regulator Sebi.
The decision to set up the fund was taken at the meeting of the Cabinet headed by Prime Minister Narendra Modi earlier in the week.
The NIIF is being established with an aim to maximise “economic impact” mainly through infrastructure development in commercially viable projects.
The planned capital expenditure in the first quarter of current fiscal grew 38 per cent to Rs 31,051 crore from Rs 22,552 crore in the same period last fiscal.