The National Investment and Infrastructure Fund (NIIF) of India on Wednesday said that it had acquired IDFC Infrastructure Finance Limited (IDFC-IFL), a non-banking finance company registered with the Reserve Bank of India as an infrastructure debt fund. IDFC-IFL lends to operating infrastructure projects, and thereby enables the original project financiers to recycle their capital following the commencement of operations. The company has a loan book of more than Rs4,500 crore, strong asset quality and no material repayment obligations for the next two years.
This acquisition is the first investment from the NIIF’s Strategic Fund and the first control transaction for the NIIF. The acquisition is subject to approval from the RBI and customary closing conditions.
“Building on this acquisition will allow the NIIF to play a meaningful role in the private debt space in Indian Infrastructure, where we see a growing need given India’s infrastructure ambition, an emerging gap as traditional infrastructure lenders consolidate and the potential for attractive returns. The long-term nature of the NIIF’s Strategic Fund, its strong governance and underwriting standards, combined with the NIIF’s ability to attract capital will allow us to build on a strong platform created by IDFC and to continue to grow the business,” said Sujoy Bose, managing director and chief executive at the NIIF.
This investment demonstrated the ability of the NIIF to make commercially attractive counter-cyclical investments, since it came at a time when the NBFC sector was facing headwinds, he added.
The government had set up the NIIF in 2015 as an investment vehicle for funding commercially viable greenfield, brownfield and stalled infrastructure projects. The government is investing 49% and the rest of the corpus is to be raised from third-party investors, such as sovereign wealth funds, insurance and pension funds, endowments.
The NIIF’s mandate includes investing in areas such as energy, transportation, housing, water, waste management and other infrastructure-related sectors in India.