USIDFC and NIIF to set up $1 -billion fund to finance renewable energy projects

USIDFC and NIIF to set up $1 -billion fund to finance renewable energy projects

Subject: Economy

Section: National Economy

Context: The United States International Development Finance Corporation (USIDFC) and India’s National Infrastructure Investment Fund (NIIF) are “working on the possibility of creating a fund” that would invest in renewable energy and green projects in India.

Details:

• The idea is broadly to create a fund with the USIDFC and NIIF bringing in $500 million each and getting more from other investors.
• NIIF is a “collaborative investment platform” for international and Indian investors, anchored by the Government of India, which manages funds with investments in different asset classes and diversified sectors that generate attractive risk-adjusted returns. NIIF manages over $44.9 billion of equity capital commitments across its four funds – Master Fund, Private Markets Fund, Strategic Opportunities Fund, and India-Japan Fund.
• USIDFC has an exposure of $4 billion in India, which is 10 per cent of its global exposure.

National Investment and Infrastructure Fund (NIIF):

• NIIF is India’s first sovereign wealth fund set up by the Government of India in 2015.
• It is an investor-owned fund manager, anchored by the Government of India (GoI) in collaboration with leading global and domestic institutional investors.
• NIIF’s mandate includes investing in areas such as energy, transportation, housing, water, waste management and other infrastructure-related sectors in India.

Functioning:

• It is being operationalized by establishing three Alternative Investment Funds (AIFs) under the SEBI Regulations.
• The proposed corpus of NIIF is Rs. 40,000 Crores funded of 49% from Government of India.
• Rest from strategic anchor partners (Overseas sovereign/quasi-sovereign/multilateral/bilateral investors).

NIIF and Three Funds:

• NIIF currently manages three funds each with its distinctive investment mandate.
• Master Fund: A fund focused on creating scalable sectoral platforms in core infrastructure and in collaboration with strong and reputed operating and financial partners.
• Fund of Funds: A fund focused on anchoring and investing incredible and reputed third-party managers with a strong track record across diversified sectors within infrastructure services and allied sectors.
• Strategic Investment Fund: A fund focused on investing in strategic assets and projects with longer-term horizon across various stages of development.