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  1. NIIF’s role as ‘mother fund’ to be changed; here’s why

NIIF’s role as ‘mother fund’ to be changed; here’s why

The NIIF is aimed at sourcing equity capital for the country’s huge infrastructure build-out. It is being set up with an initial corpus of Rs 40,000 crore, 49% of which will be contributed by the government, which will remain a minority partner.

By: | Mumbai | Published: June 10, 2016 6:58 AM
Economic Affairs Secretary Shaktikanta said that while earlier the NIIF was conceived as a kind of mother fund housing several sub-funds, this construct might need to be altered. Economic Affairs Secretary Shaktikanta said that while earlier the NIIF was conceived as a kind of mother fund housing several sub-funds, this construct might need to be altered. (PTI)

Economic affairs secretary Shaktikanta Das on Thursday said the government may rework the investment model of the National Investment and Infrastructure Fund (NIIF) to enable investors to co-invest in individual projects.

“We found that the investment pattern of NIIF which we had in mind originally required some amount of tweaking within the broad framework. The governing council has decided that the investment model will have to be tweaked,” Das said at an event organised by SKOCH.

Also Read: Roadmap for disinvestment will be implemented: Shaktikanta Das

Das added later that while earlier the NIIF was conceived as a kind of mother fund housing several sub-funds, this construct might need to be altered.

Now we realise, after interactions with investors from both within and abroad, that there is equal interest or perhaps greater interest to co-invest in individual projects. While co-investment in individual projects is important, what is also important is that the investors come into the mother fund because the government’s equity contribution will be only 49%,” Das pointed out.

The NIIF is aimed at sourcing equity capital for the country’s huge infrastructure build-out. It is being set up with an initial corpus of Rs 40,000 crore, 49% of which will be contributed by the government, which will remain a minority partner.

Das said that the government was in discussions with various investors who would co-invest in specific projects. “At the same time they will invest in the mother fund. So, therefore, the underlying sub-funds need not be sub-funds, most of them will now be closed-ended schemes,” he added. The secretary observed that the government was also in discussion with several domestic investors. “In addition to overseas and local players, multilateral institutions have also shown interest in the NIIF. They are very keen to come into the NIIF,” Das said.

He indicated the government was expecting GDP to clock a growth of a 8% in 2016-17 if the monsoon turns out to be a good one. “With a good monsoon that we expect this year, with the passage of GST (goods and services tax) — the government is confident it will happen in the monsoon session of Parliament — and the cumulative result of all the policy initiatives and reform measures which have been taken, I think this year we are looking at 8%,” Das said.

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