NIIF to not invest in stressed assets

NEW DELHI: In a marked departure from its stated purpose, India’s maiden sovereign wealth fund, NIIF, will not fund stalled projects for the time being. What’s more,

Published on: Jun 30, 2016, 07:05:52 IST

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NEW DELHI: In a marked departure from its stated purpose, India’s maiden sovereign wealth fund, NIIF, will not fund stalled projects for the time being. What’s more, it will only put money in road and renewable energy sectors for the time being.

The initial focus of the National Investment and Infrastructure Fund (NIIF) will be to fund greenfield and brownfield projects in road and green energy sectors, finance ministry sources said.

“There will be sub-funds within NIIF, and they will focus on funding road and renewable power projects. But not stressed projects,” said an official in the finance ministry, who did not wish to be named .“These sectors have been chosen since they have exceptionally high funding needs. These are also priority sectors for the government.”

The ₹40,000-crore NIIF was set up in December 2015, with the government holding 49% in the fund. Private investors are set to hold the remaining stake, and the government has already signed MoUs with Russia’s Rusnano, ADIA of Abu Dhabi and Qatar sovereign wealth fund QIA to study investment opportunities in the Indian infrastructure sector.

Earlier this week, Sujoy Bose was appointed CEO of NIIF, which is likely to be operational by the year-end.

The main reason for the fund to stay away from stalled projects is due to lack of interest from other investors to put money in stressed assets, at least initially, said the sources quoted above. Sovereign funds of foreign countries, as well as private investors, had expressed concerns to invest in such projects. They had also expressed interests to invest directly in stressed projects and not go through NIIF.

“This would have defied the purpose of creating an infrastructure fund,” said a top official in the finance ministry.

“We will have to evaluate the success of the fund and then look at investing in stressed assets,” he added.

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