Context: India’s National Investment and Infrastructure Fund (NIIF) and Japan Bank for International Cooperation (JBIC) jointly launched a $600 million fund on Wednesday for climate and environment projects.
Infrastructure projects frequently exhibit long-gestation periods, creating challenge for financial institutions to manage their short-term liabilities with these long-term cash-flow profiles.
To avoid these Asset-liabilities mismatch faced by the banks in funding infrastructure projects, Government has constituted National Investment and Infrastructure Fund (NIIF) with an authorised capital of 20,000 crores, to provide long-term institutional investment support to infra projects in India.
What is NIIF?
The National Investment and Infrastructure Fund (NIIF) is a state-owned fund created by the GoI in 2015 to support infrastructural development in India, by gathering capital from domestic and international investors. It has three components under it:
- Master fund: This fund primarily invests in infra-related projects such as roads, ports, airports, and power. It invests in both green field(new) as well as brownfield(operating) projects.
- Fund of Funds: This fund invests in other funds managed by the renowned fund managers having a good track record in funding successful infrastructure projects. That means, this fund acts as an anchor investor to other private funds.
- Strategic Opportunities Fund (SOF): SOF targets to invest in companies belonging to sectors that have good growth potential.