India needs $150 billion to $300 billion of equity over the next five years to drive infrastructure investments, National Investment and Infrastructure Fund CEO Sujoy Bose said.
The NIIF, which will start operations with a first-phase corpus of $6 billion, would focus on equity and quasi-equity investments at a scale never seen before in India as it will be six times larger than the biggest infrastructure fund currently, said Mr. Bose, who took charge as the fund’s CEO earlier this month.
“By the most conservative standards, as per McKinsey, India needs to invest $450 billion over the next five years,” Mr. Bose said. “The government of India estimates are about double that. Let’s say this amount is invested by leveraging 70 per cent debt and 30 per cent equity, we are looking at anywhere between $150 billion to $300 billion equity to drive infrastructure investments in India over the next five years alone.”
Private investment
As the private or public sectors can’t meet this investment demand on their own, the NIIF will work on creating smart public private partnerships (PPPs) to fund projects of unprecedented scale and will also continuously suggest policy improvements to support infrastructure sector investments.
Speaking for the first time after taking charge, Mr. Bose pointed out the problem with India’s past infrastructure investments.
“It’s not that capital hasn’t been invested in India,” Mr. Bose said. “In the last macro cycle, significant capital went into the infrastructure sector. But while there were several issues, one of the aspects was that capital was invested on a fragmented basis by companies that had relatively little access to equity and as a result, they took a more short-term development oriented approach to investing.”
“What we are hoping and expect to do at NIIF, is to complement the short-term development capital.”
