Lok Sabha Question No. 1699 (UNSTARRED), answered on 2018-07-27
Subject: National Infrastructure and Investment Fund
Ministry: FINANCE
Asked by: PARASURAMAN K.

## GOVERNMENT OF INDIA

## MIMSTRY OF FINAIICE

## DEPARTMENT OF ECONOIVIC  AIT'AIRS

## LOKSABHA

## UNSTARRED QLJESTTON NO. 1699

TO BE ANSWERED  ON FRrDAy, JIJIY 27,2018 / SI{RAVANA  5, 1940 (SAKA)

## NATIONAL IITFRASTRUCTT]RE A}ID II\WESTMENT FUND

## 169: SERI IC PARASTJRAMAN:

Will the Minister  of FINAITICE be pleased to state:

n

- (a) whether  tle Govemment has set up the National Infi'astructue and Investnent  Fund (NIIF)  for development  of infi'asfucture  project;
- @)  if so, the details  of the functions as well as the aims and objectives  of seting  up the  qaid fimd and the manner in which the said fund is likely to be utilize.d;
- (c) the details of the categories and the number  of infiastructure  projects existing and new proposed to be developed by the Govemment  as on dat€ with the support  ofNIIF;
- (d) whether  the Government  tias taken steps  to set up a supervisory  body  which oversees  the sanctioq allocation and utilization  of the fund towards different infrastructur€  projects  in order to prcvent m isappropriation  of fund; and
- (e) if so, the details  thereofand  ifnot,  the reasons  therefor?

## ANSWER

## MIMSTER OF STATE IN THE MINISTRY  OF FINATICE

## (SHRI PON. RADHAKRISHNAN)

(a) to (b): Yes Madam. The establishment  of the NIIF was announced vide para 47 of the Budget  Speec[ on 28th February  2015 and approved  by the Union Cabinet on 29th July, 2015.  MIF has been formed to invest in commercially  viable projects,  both greenfield  and brownfield, including stalled projects for infrastructure  developmen! combining govemment's  contributions  together with intemational  and domestic  commercial capital. NIIF has been set up as a trust registercd with Securities  and Exchange Board of India C'SEBP)  as a Category  II Alternat€  Investment  Fund ("ap"; under the SEBI (Alternative lnvestsnents  Funds) Regulations,2012  ("AIF  Regulations').  The proposed corpus of NIIF is Rs.40,000 Crorcs (around  USD 6 Billion). Govemment's contribution/  share  in the corpus will be 49% in each entity set up as an AIF and will neither be increased  beyond,  nor allowed to fall below  49%. The whole  of 49/o would be conributed  by the Govemment  of lndia directly.

As on date, three ftnds  have been established under the NIIF platform  and registered with SEBI as Category  II Altemative Investment  Funds. NIIF Funds are managed by MIF

Limite4 a company  registered under the Companies Act, 2013 and regulated  by SEBI as a fund manager  of SEBl-registered  AIFs.

The NIIF Funds work on a model whereby equity participation from stategic  partners (including  overseas  sovereign / quasi-sovereign / multilateral  I bilal'erul  investors)  is invite4 alongside Govemm6nt's contribution.

Functions  of MIF and its investment manager,  MIF Limited  arc:

- (D Fund raising,  which would include  attsacting  investors into NIIF Funds;
- Servicing  ofthe investors in the frrnds;
- (iii) Investing the NIIF Funds, which would entail considering investsnent opportunities,  analyzing  them and investing  funds in companies, projectg  or other funds; and
- (ii)
- (iv) Periodic  monitoring of investments.

(c): Of the three funds set up with SEBI,  two funds have commenced  making  invesrnents. The first fund registered  by SEBI is National  Investment  and Infrastnrcture  Fund, or Master Fund, which aims to focus on investing  in companies  and projects in core infrastuctue sectors such as ports and logisticg roads, airports and potentially  others. The Master Fund investors  currently include Govemment  of lndi4 Abu Dhabi lnvesfinent Authority  (ADIA), Axis Bank Ltd, HDFC Asset Management  Company Ltd, IIDFC Standard Life Insurance Company Ltd, Housing Development Finance Company Ltd, ICICI Bank Ltd, and Kotak Mahindra  Life Insurance Company  Limited. The NIIF Master  Fund has invested  in a Ports and logistics company named  Hindustan Infralog Private Limited in a joint venhre  with DP World,  a global ports operator. Hindustan  Infralog Private Limited  has recently  consummated its first investment.

The second fund is the NIIF Fund of Funds  -  I, which has been set up to make investrnents  in various funds in infrastucture  services and allied sectors. A term sheet has been sigred  with Asian Infrastructue Investnent  Bank (AIIB)  thereby making it an anchor investor  in the NIIF  Fund of Funds-I.  NIIF Fund  of Funds-I's  first investnent  has been in the Green Gro*th  Equity  Fund (GGEF).  Departnent  for Intemational  Development  (DFID), an arm of the UK govemmenL  has committed  to invest  GBP 120 million in GGEF.

(d)  &  (e): The NIIF Funds are registered with, and regulated by, SEBI as Category  II Altemative  Investment  Funds. Since 51% ofthe corpus  ofNIIF Funds is from investors other than Govemment  of Indi4 NIIF Limited  is set up to operate  at arm's length from the Govemment. For this purpose,  it was decided that NIIF Limited would have full autonomy for investrnent selection on the basis ofan established  process agreed by investors.

The govemance suucture for NIIF is in line with practices used in the funds industry, and under supervision  of SEBI. NIIF Limited  comprises  a team of professionals,  Its Board  of Directors includes representatives from investors, including  the Government of India, and industry  veterans  as independent  directors.  In addition,  NIIF  has a Goveming Council  which is chaired  by the Hon'ble Finance  Minister and includes senior Govemrnent offrcials and industry  experts.