Temasek to invest $400 million in NIIF’s master fund

The National Investment and Infrastructure Fund (NIIF) announced on Thursday that Singapore's Temasek will invest up to $400 million in its Master Fund.

Temasek becomes the sixth investor in NIIF’s Master Fund alongside the Indian government, Abu Dhabi Investment Authority, HDFC Group, ICICI Bank, Kotak Mahindra Life Insurance, and Axis Bank.

Sujoy Bose, managing director and CEO of NIIF, confirmed Temasek's plan to invest in NIIF, an investor-owned fund manager, anchored by the government of India (with a 49% stake), but didn't disclose the stake Temasek would pick up.

NIIF manages two other funds, the Fund of Funds and the Strategic Investment Fund, which is in early stages of design.

“Ultimately what we are aspiring for is a master fund with a corpus of $2.1 billion (approx. Rs 14,000 crore). This investment (from all the six investors) is targeted mostly towards the Master Fund. However, there is some flexibility in how we want to use it,” Bose told reporters in Mumbai.

NIIF might use a part of the Temasek investment towards its other two funds, including the Strategic Investment Fund, through which NIIF wants to make around half a dozen sizeable investments in critical infrastructure projects.

The proposed investment from Temasek in the NIIF fund is a reaffirmation global investor optimism about the growth prospects of the Indian infrastructure sector. India's GDP growth in the first quarter came in at 8.2%, the highest quarterly growth rate in over two years.

To sustain this level of economic growth, the country's infrastructure needs to keep pace. Through various ministries of the government, there is an attempt to accelerate the pace at which new roads, airports and railway lines (including intra-city metro rail) are commissioned. However, with Indian banks in a precarious state vis-a-vis the bad loans on their books, debt funding for these projects has become difficult to come by.