Cabinet clears equity infusion of Rs 6,000 crore in NIIF debt platform over two years

Economy
New Delhi: Union Minister Prakash Javadekar

New Delhi: Union Minister Prakash Javadekar

In a bid to push infrastructure creation in the country, the Union Cabinet on November 25 approved Rs.6000 crore capital infusion in National Investment and Infrastructure Fund’s (NIIF) debt platform over the next two years.

This will help the entity to raise Rs 1 lakh crores in debt by 2025 to finance infrastructure projects.

The equity infusion will be sponsored by Aseem Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF-IFL).

Union Minister Prakash Javadekar, while addressing a media briefing, said, “Of the Rs 100 lakh crore been earmarked for infrastructure, nearly Rs 70 lakh crore is expected to come from the bond market and debt funds. Today’s decision is start. The government will provide Rs 6,000 crore; the National Investment Infrastructure Fund (NIIF) will provide Rs 7,000 crore equity and nearly Rs 1 lakh crore will be raised from the bond market.”

The government will invest Rs. 6000 crore as equity and the rest will be raised through the private investors.

To support the funding of the National Infrastructure Pipeline announced by the Finance Minister earlier last year, the equity infusion comes as an additional support, Javadekar informed.

Javadekar also said that the AIFL will predominantly focus on under construction, greenfield, brownfield assets with less than one year of operations whereas NIIF IFL will operate as a take-out vehicle for mature operating assets.

Additionally, the Union Minister said that the debt platform will to raise external long-term equity capital as well as debt from both domestic and international markets over the next few years which could result in a multiplier of 14 -18 times of the proposed capital infusion of up to Rs. 6,000 crore from GOI.

It is expected that well-capitalized, well-funded and well-governed NIIF debt Platform can play a major role in infrastructure financing and development of Bond Market in India by acting as a AAA/AA-rated intermediary between the bond markets and infrastructure projects and companies.

The move will also help relieve exposure of banks to infrastructure projects and free up space for new green-field projects.

“The decision will take care of the financial needs of planned infrastructure projects. It shows the world that they can believe in India’s development and that they can be a part of it,” said Javadekar.

The proposal to invest Rs.6000 crore as equity into NIIF is a part of the Aatmanirbhar Bharat 3.0 package announced earlier this month.

Written by Rakesh Sashmal