National Investment and Infrastructure Fund (NIIF) Ltd has signed an initial pact with Russia’s state-run Rusnano OJSC to set up a fund that would invest in high-technology projects in India.
The agreement for the Russia-India High Technology Private Equity Fund comes just months after Prime Minister Narendra Modi’s visit to Moscow where both sides had agreed to facilitate high-technology investments in India, a government statement said.
The statement didn’t disclose the fund’s targeted corpus. However, the Russian firm said in a separate statement that Rusnano and NIIF will invest $2 billion in equal shares and will establish a joint management company.
The fund size can be increased, if necessary, Anatoly Chubais, chairman of the executive board of Rusnano, said in the statement. “The fund aims to strengthen the competitive position of Russian companies and promote the export of Russian high technologies into the promising Indian market,” Chubais said.
The PE fund will focus on hi-tech projects at growth stage, including dual-use technologies and defence industry products, the Rusnano statement said.
Rusnano, or Russian Nanotechnology Corporation, invests in high-tech and defence projects including those aimed at setting up manufacturing industrial enterprises in India. This will be its second pact within a month. A fortnight ago, it had tied up with China’s Zhongrong International Trust to launch a $500-million Rusnano Zhongrong United Investment Fund. Last year, Rusnano invested in Russia’s largest pipeline company TMK to expand high-tech pipe production.
On the other hand, NIIF is a relatively new fund that was conceptualized and established last year as a Category II Alternate Investment Fund under the Securities and Exchange Board of India’s regulations.
While the government is yet to start investments from the fund, it had said that the initial corpus of the fund is expected to be Rs 40,000 crore ($6 billion) with half the investment coming from the government.
The finance ministry had in October constituted a search-cum-selection committee led by economic affairs secretary Shaktikanta Das to choose a CEO for the investment management company under the NIIF.
While this is the first tie-up for NIIF, it is certainly not the first of its kind for an Indian company. Last year, State Bank of India had committed Rs 635 crore ($100 milllion then) for a second $300 million Oman India PE fund raised by Oman India Joint Investment Fund (OIJIF).
OIJIF is a joint venture between Oman’s sovereign wealth fund, State General Reserve Fund, and SBI that was formed in 2010 to have a corpus of up to $1.5 billion across follow-on vehicles to invest in India.
According to VCCEdge, the data-research platform of VCCircle, the fund has invested in seven companies since 2012. It made its first exit last year when it sold its entire stake in Solar Industries India Ltd, which was its second investment, for around Rs 240 crore ($37 million) in October.