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India: National Investment and Infrastructure Fund Phase I

SUMMARY

STATUS
Approved
MEMBER
India
SECTOR
Financial Institution
E&S CATEGORY
FI
PROJECT NUMBER
000030

FINANCING

PROJECT TYPE
Stand-alone
APPROVED FUNDING
USD100 million
FINANCING TYPE
Nonsovereign

TIMELINE

CONCEPT REVIEW
April 28, 2017
APPRAISAL REVIEW/FINAL REVIEW
May 31, 2018
FINANCING APPROVAL
June 24, 2018

OBJECTIVE

The Project objective is to support private capital mobilization from institutional investors to reduce the equity financing gap in infrastructure and related sectors in India by investing in the Fund.

DESCRIPTION

Since infrastructure investments require long-term, patient capital, the Government of India anchored the establishment of the National Investment and Infrastructure Fund Ltd (NIIFL), a fund manager that manages investments in infrastructure and related sectors in India. NIIF Limited manages over USD 4.3 billion of capital commitments across its three funds – Master Fund, Fund of Funds and Strategic Opportunities Fund, each with its distinct investment strategy. The Fund of Funds, registered with the Securities and Exchange Board of India (‘SEBI’) as NIIF Fund of Funds– I (Fund ), is in a unique and strong position to provide fillip to funds dedicated to infrastructure and related sectors in India. The Investment Strategy of the Fund is to focus on achieving appropriate diversification to earn superior risk adjusted returns through allocation across sub-funds managed by best-in-class fund managers with an India-focused investment strategy with varying sectoral, product (equity, mezzanine, debt) and investment styles (early stage, growth, control, minority). The Fund’s sectors of focus include but are not limited to green infrastructure, mid-income/affordable housing, infrastructure services, social infrastructure, urban infrastructure, industrials and telecommunications.

PROJECT FINANCING

For more information about project financing, please review the project summary.

ENVIRONMENTAL AND SOCIAL INFORMATION

AIIB’s Environmental and Social Policy (ESP) is applicable to the Bank’s participation in the Fund. The Project has been placed in Category FI, because the financing structure involves the provision of AIIB’s funds through a Financial Intermediary (FI). AIIB delegates to NIIFL the decision-making on the use of Bank funds, including the selection, appraisal, approval and monitoring of sub-funds and the oversight of their respective investments in portfolio companies, in accordance with the investment documentation and the Environmental and Social Management System (ESMS) adopted by NIIFL and approved by AIIB. The ESMS makes provisions for application of AIIB’s ESP and wherever applicable, the Environmental and Social Standards to the Fund’s investments.

NIIFL has prepared an Environmental and Social Policy (E&S Policy), approved by its Board and disclosed on its website, outlining four ESMS Principles covering (1) Environmental and Social Risk Assessment and Management Systems, (2) Environmental Risks and Management, (3) Human Resources Management, and (4) Social Risk and Management. A detailed ESMS procedure has been developed, defining the processes and requirements applicable to investments into Private Equity Funds (PE Funds), the processes and standards that are required to be followed by these PE Funds and the requirements applicable to their portfolio companies. AIIB has confirmed that NIIFL’s E&S Policy and ESMS structure constitute an appropriate system for screening and categorizing, reviewing, conducting due diligence on, managing and monitoring the environmental and social risks and impacts associated with investments funded under the Fund in a manner aligned with the requirements of the Bank’s ESP.

For all Fund investments committed after the approval of its E&S Policy, and based on AIIB’s prior review of the initial investments and NIIFL’s reporting to date, NIIFL has conducted adequate environmental and social (E&S) due diligence and applied the Fund’s standards and requirements as per its ESMS to its sub-funds. NIIFL has established in-house E&S resources, contracted qualified third parties to conduct E&S Due Diligence on targeted PE Funds, engaged in building relevant capacity in Fund investees and conducts monitoring of sub-funds and reporting to AIIB.

NIIFL has disclosed the Fund’s three investments in sub-funds made to date on its webpage, providing a brief description of these funds.

Since the adoption of its E&S Policy, the Fund Manager is required to ensure that sub-funds: (a) require all portfolio companies engaged in Category A and selected Category B sub-projects to disclose and consult on E&S documentation with stakeholders, including sub-project-affected people, before finalizing the E&S instruments; and (b) establish a Grievance Redress Mechanism (GRM) for all sub-projects or business activities financed using AIIB’s proceeds. Respective fund managers are required to develop and maintain capacity to address inquiries from external stakeholders about their portfolio companies’ E&S performance, conduct regular monitoring of their portfolio companies and report to NIIFL on an annual basis.

AIIB has provided support to NIIFL for the development of its E&S Policy and ESMS framework and continues to regularly engage with NIIFL and sub-funds’ managers and selected portfolio companies in the scope of NIIFL’s supervision and implementation.

PROJECT TEAM LEADER

Alok Dayal

Senior Portfolio Monitoring Specialist

alok.dayal@aiib.org

 

BORROWER

N/A

IMPLEMENTING ENTITY

Anand Unnikrishnan

Managing Partner– Fund of Funds
National Investment and Infrastructure Fund Ltd (NIIFL)

Anand.Unnikrishnan@niifindia.in

 

PROJECT DOCUMENTS

CLIENT/COFINANCING PARTNER DOCUMENTS

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