NIIF raises $750 million for its second private market fund

New Delhi: India's National Investment and Infrastructure Fund (NIIF) has raised $750 million for its second private markets fund that will look to invest indirectly into local companies by backing other private equity and venture capital funds, said a senior executive.

"As a sovereign-backed institution, our role is to open the Indian market to newer investors," said Anand Unnikrishnan, managing partner, private markets, NIIF. "We are a gateway for global limited partners who have the comfort of investing through us into mid-market private equity opportunities," said Unnikrishnan, ahead of an investor conference in New Delhi.

NIIF has a target to raise $1 billion for its second private markets fund.


"We are seeing active interest to invest in the India PE/VC segment from global investors, particularly in Europe and Japan and are confident of reaching the USD 1 billion target size," said Unnikrishnan.

He said NIIF's first private markets fund-which raised about $600 million in 2019-has deployed the capital across nine Indian private equity and venture capital funds, realising 40% of the investment so far. That fund has a 15-year investment timeline through 2034. Unnikrishnan said India is witnessing annual PE flows of $50 billion over the last three years, reflecting continued investor interest.

"The indirect investment strategy helps to mitigate risks," he said. "Investors overseas may not really have deep insights to invest in Indian mid-market private equity opportunities where returns are very attractive."

He highlighted that such global investors could instead opt for investing through NIIF's fund, which in turn provides capital to mid-market PE fund managers for directly investing in companies.

The second fund has secured backing from the government of India, which has subscribed to 49% of the corpus. Others who have committed to the fund include Asian Infrastructure Investment Bank (AIIB), and New Development Bank as well as financial institutions from Japan and India.

ET was the first to report in July last year that NIIF was on course to complete the first close of the second private markets fund.

As per NIIF's website, the first private markets fund has invested in mid-market PE fund managers such as Multiples PE, Eversource Capital, Somerset Healthcare Fund, InvAscent, and Lighthouse. These managers injected capital in companies operating in sectors such as energy transition, healthcare, manufacturing, technology, and financial inclusion.

PE fund managers directly investing in companies are referred to as general partners. Investors who provide them capital to make those investments are referred to as limited partners.