Temasek commits up to $400m to India’s NIIF

The Singaporean state investment company will invest in the state-backed vehicle’s Master Fund and become a shareholder in its investment management company.

Singapore’s state-owned investment firm Temasek has agreed to invest up to $400 million in India’s infrastructure sector by partnering with the National Investment and Infrastructure Fund, India’s government-backed vehicle.

NIIF said the agreement included an initial commitment to NIIF’s Master Fund as well as future potential co-investment opportunities, but declined to disclose specific figures. Under the terms of the agreement, Temasek also becomes a shareholder in National Investment and Infrastructure Limited, NIIF’s investment management company.

“We are pleased to be able to participate in India’s growth, through our investment alongside the Indian government and other institutions in the National Investment and Infrastructure Fund,” Rohit Sipahimalani, joint head of Temasek’s India office, told Infrastructure Investor.

“The Fund reflects the government’s intent to channel capital into funding infrastructure assets and platforms, such as those in the transport, energy and urban infrastructure space, that would further support the development of sectors required for India’s continued growth,” Sipahimalani said, referring to NIIF’s Master Fund, which primarily invests in operating assets in core infrastructure sectors and is one of three funds NIIL manages.

The other two are the Strategic Investment Fund, which according to the NIIF website is aimed at growth and development-stage investments across a broad range of infrastructure sectors.

NIIF’s third fund is a Fund of Funds strategy which also focuses across the infrastructure spectrum but in partnership with experienced fund managers.

Last April, NIIF’s Fund of Funds made its debut investment partnering the UK government to launch the Green Growth Equity Fund, a £500 million ($701 million; €571 million) investment vehicle that will focus on green infrastructure in India.

“Temasek is one of the most renowned institutional investors globally and will add to the roster of marquee investors backing NIIF,” Sujoy Bose, NIIF’s managing director and chief executive said in a statement.

Launched in July 2015 to attract private capital, the NIIF has a target of $6 billion and is backed by the Indian government which is sponsoring half of the fund’s capital. Since then, other institutional investors – including the Abu Dhabi Investment Authority, DFC Group, ICICI Bank, Kotak Mahindra Life Insurance and Axis Bank have invested in the Master Fund.

Asked about potential investment from East Asia and South-east Asia investors, Bose told Infrastructure Investor that “all funds [of NIIF] are in the process of raising capital from domestic and international institutional investors”.

Interest in India’s infrastructure sector has surged recently. During the first half of 2018, fund managers raised $651 million for India-focused infrastructure vehicles, according to EMPEA, the global industry association for private capital in emerging markets.

In March, Macquarie Infrastructure and Real Assets submitted a $1.5 billion winning bid to operate nine tolled highways in the country, making it the largest infrastructure deal ever recorded by EMPEA in emerging markets.