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| Strategic Investment Funds
FIGURE 12.2
NIIF’s Master Fund structure Asset mgmt. company NIIF Limited (AMC)
Ownership: 49%
Government of India
AMC Board: • Investor representatives • 2 government representatives • Independent directors
Ownership: 51%
Investor 1
Investor 2
Investor 3
51% US$1+ billion
49% US$1 billion
Roads platform
Master Fund (US$2 billion +)
Ports platform
Urban infrastructure
Investor 4
Investor 5
Master Fund advisory board: • Investor representatives • 1 government of India representative Investment committee of Master Fund: • NIIF Ltd CEO and senior management team • 1 independent member
Airports platform
Energy platform
Co-investment pool 3:1 for existing Master Fund investors Source: World Bank elaboration. Note: AMC = asset management company; CEO = chief executive officer; mgmt. = management; NIIF = National Investment and Infrastructure Fund.
through board representation or contractual rights (for example, veto) over key decisions such as investments, capital expenditure, leverage, related-party transactions, dividend, corporate deals, and exit options. Some platforms may be newly incubated by the Master Fund. Platforms are meant not only to be a vehicle to channel international capital to India but also to build strong domestic expertise in infrastructure investment and development. A key part of the strategy is to generate co-investment opportunities for the investors as the platform companies grow. The expected holding period for a platform is 8–10 years. Exits may include sale to other investors (such as domestic or international insurance and pension funds), initial public offerings or listed trusts, and refinancing or buy-back by promoters. All platforms will operate on a commercial basis. The Master Fund will seek to diversify investments by vintage year.5 For example, in January 2018, the Master Fund established a platform with DP World, the Dubai-based port terminal owner and operator, to invest in ports, terminals, transportation, and logistics businesses in India. DP World controls the platform with a 65 percent stake and the Master Fund is a significant minority investor with the remaining 35 percent of the equity. The platform will invest up to US$3 billion of equity to acquire assets and develop projects in the sector. In March 2018, this platform made its first investment acquiring a 90 percent stake in Continental Warehousing, a terminal and logistics business previously controlled jointly by private equity firms Abraaj and Warburg Pincus,