NIIF will provide long-term patient capital for infra sector, says Sujoy Bose

Mumbai: The National Investment and Infrastructure Fund (NIIF) will provide a form of “takeout capital” that the country’s struggling infrastructure developers need, said its chief executive officer (CEO) Sujoy Bose. NIIF, which has been set up on the lines of a sovereign wealth fund with 49% equity held by the Union government, is a platform that will invest the kind of long-term patient capital that the sector needs, Bose said.

“I think there’s a big opportunity in operating assets,” Bose said. “Right now, there’s a lot of equity stuck with developers. If we can take this off their balance sheet, you open up the space for them to do new things. This way, even the government can recycle capital and re-create pools of capital. There’s a huge impact of bringing in this kind of takeout financing.”

“Right now, what India really needs is takeout capital... that can clean up and clear up some (clogged) balance sheets,” he said.

Bose was speaking on the sidelines of an Indian infrastructure convention organised in the city on Monday by RIS (Research and Information System), the ministry of finance and the Federation of Indian Chambers of Commerce and Industry (FICCI).

NIIF was set up in December 2016 with a planned corpus of ₹ 40,000 crore. It was launched as an investment vehicle to fund commercially viable greenfield, brownfield and stalled projects.

While the government brought in 49% of the capital, the remaining capital requirement was raised from strategic anchor investors, including sovereign wealth and pension funds and multilateral financial institutions.

Its master fund, with a corpus of ₹ 15,000 crore, made its first investment earlier this year by partnering with Dubai-based DP World to buy Continental Warehousing Corp, one of the largest logistics companies in India. The platform that NIIF and DP World have created—Hindustan Infralog—will further invest in ports, terminals, transportation and logistics. The ₹ 7,000 crore fund of funds also announced its first tie-up recently with the India-UK Green Growth Equity Fund, which Bose said will look at opportunities in renewable energy and water and sanitation projects.

NIIF will also next launch a third sub-fund with a longer, possibly 25-year tenure, Bose added. He declined to give further details.

“We’re building an institution, a structure, a platform, governance systems, we’re building a team and bringing in investors,” Bose said. “So all this has been happening. We’ll put this all together in the last year or so.”

“Fund-raising is a tough business and fund-raising in a new institution is even tougher. We need to convince people that we’re building an institution in the right way...The idea is to do everything on a commercial basis at scale. If we build a good platform, we will raise as much capital as we can get,” he said.

Bose also said that in the future NIIF will consider developing greenfield projects as well as investing in state-level infrastructure. “Our belief is that eventually, the bulk of what we will be doing will be state governments. The National Highways Authority of India and Power Grid Corp have access to multiple sources of capital but at the state-level there is not as much. We will play a prominent role here,” he said.