National Investment and Infrastructure Fund (NIIF)

National Investment and Infrastructure Fund (NIIF)

Objective:-

• Maximize economic impact mainly through Infrastructure Development in commercially viable projects, both greenfield and brownfield, including stalled projects.

Structure:- 

• NIIF will be established as one or more Alternate Investment Funds (AIF) under the SEBI regulations. 
• For Category I and II AIF, NIIF will be eligible for a pass through under the Income Tax Act. 
• In case of Category III AIF, all NIIF income shall be taxable at its level and any distribution made to its unit holders (investors) would be tax exempt.
• The initial authorized corpus of the fund would be Rs. 20,000/- Cr. which may be enhanced from time to time by the Govt. (with govt. share in each AIF would be 49% at all times)
• Will be established as a trust or any other legal entity with a governing council with experts from Govt., private sector, infrastrcure experts etc. 
• NIIF will be supported by a CEO with a small investment team.

Functions:- 

1. Fund Raising, and servicing of the investors of the fund
2. Investing, in projects, institutions, or companies
• Equity/quasi equity support to NBFCs/FIs engaged in the infrastructure financing.
• In funds engaged in the infrastructure sector and managed by AMCs for equity and quasi equity.
• Equity/quasi equity/debt support to commercially viable infrastructure projects both in greenfield and brownfield including stalled projects.
3. Preparing a shelf of infrastructure projects, and providing advisory services

―Alternative Investment Fund means any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which,- 

(i) is a privately pooled investment vehicle which collects funds from investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors; and 

(ii) is not covered under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities

Provided that the following shall not be considered as Alternative Investment Fund for the purpose of these regulations,- 

(i) family trusts set up for the benefit of ‗relatives‘ as defined under Companies Act, 1956; 

(ii) ESOP Trusts set up under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999 or as permitted under Companies Act, 1956; 

(iii) employee welfare trusts or gratuity trusts set up for the benefit of employees; (iv) ‗holding companies‘ within the meaning of Section 4 of the Companies Act, 1956; 

(v) other special purpose vehicles not established by fund managers, including securitization trusts, regulated under a specific regulatory framework; 

(vi) funds managed by securitisation company or reconstruction company which is registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; and 

(vii) any such pool of funds which is directly regulated by any other regulator in India;

The Alternative Investment Funds (AIFs) have been categorised into three classes:

• Category I: These funds receive incentives from the government, SEBI or other regulating agencies. These include social venture funds, infrastructure funds, venture capital funds and SME funds.

• Category II: These funds are allowed to investment anywhere in any combination, but are not take debts, except for day-to-day operation purposes. These include private equity funds and debt funds.

• Category III: Funds that make short-term investments and then sell, like hedge funds, come under this.