New Delhi: National Investment and Infrastructure Fund (NIIF) chief executive Sanjiv Aggarwal has laid out an ambitious growth road map for India’s sovereign wealth fund. In his first media interview since taking charge in January 2024, managing director and chief executive officer Aggarwal said that NIIF plans to set up a $600 million e-mobility platform, Avega, and is seeking anchor investors for a Green Transition Fund targeting up to $1 billion. The fund is also preparing to dilute a 40% stake in its power transmission platform, AnantGrid Pvt. Ltd, to a co-sponsor.
Aggarwal, who previously oversaw global private equity firm Actis’s energy investments in Asia, also talked about not funding a Large Language Model AI play. Edited excerpts:
With two and a half years now at NIIF’s helm, how has the experience been, given that this is your first stint in the government sector?
The experience has been very good. When I started the job, I did so with some trepidation. I never worked in government, didn’t know its ways, and always had this little fear: for someone who spent his entire career in the private sector, how would a job be where the government is a large shareholder? But in my last two and a half years, and I say this to people, I think the government has been extremely supportive. They have put together a framework within that, while NIIF is a 49%-government-owned company, allows it to operate as a pure commercial investor. It gives me, as a CEO (chief executive officer), the powers, authority, and discretion to run this company as a global private equity firm would.
How difficult is it now to raise money?
See, first, in terms of raising money, raising commercial money has always been difficult. It’s never easy for people from growth markets like India to raise money from external commercial entities. In today’s environment, I will argue that it’s become even more difficult. Look at the global macros. Countries such as India benefit from a strong domestic economy. People know that India needs infrastructure. There is a whole lot of demand domestically for . Therefore, people are still willing to consider investing money. But this kind of a tough macro makes things challenging.
The other point that works in our favour is that when I go out to raise money, I say that the government approved ₹30,000 crore in July. So there is a 49% anchor who has already written a commitment for this kind of amount. On the back of that, and the track record of NIIF and its team, we go out, raise money, and are successful. We just did the first close of our second infra fund at ₹20,000 crore, or $2 billion. Our target is $3.2 billion. But I will not underplay how difficult the fundraising market is. This market is, in my opinion, going to become more challenging because countries like Canada are now taking whatever steps are needed to attract foreign capital.
Is there some conversation happening for a new climate fund?
So, look, right now we have to invest this fund ($600 million ). We expect to complete this investment within the next 18 months. Once I reach 70% of the commitment threshold, I will start raising my next fund.
What is the status of the Green Transition Fund with US International Development Finance Corporation?
We are in conversations with USIDFC and continue to engage with them, but we are also in discussions with other bilateral and multilateral institutions to see if we can get them to come in as an anchor investor and help grow that.
What would be the size of that fund?
We are in discussions, and the amount could range from $600 million to $1 billion.
Is there a corpus in mind that you want NIIF to manage by 2030?
So, if you look at the growth rate, we are at $7 billion today. We were at $4.3 billion, which is like a 63% growth rate, right? So, what are the clear avenues for us? I am raising a $3.2 billion infrastructure fund. In the next four to five years, I will raise my next infra fund. It will be a larger fund, because the country is growing, and we have opportunities here. Now, what that number is, I don’t know; it could be $5 billion, $6 billion, some number like that. But it will be a significant reflection of the kind of deals that we want to do.
We don’t want to be a run-of-the-mill investor in the sectors that we dominate. NIIF has to be seen to be doing large marquee transactions, all of which will be purely commercial, and they will, of course, have to deliver superior returns. But our approach now is to do large deals. For example, we are today setting up a transmission business in the country.
So, this transmission will be a billion-dollar business?
It will be about $800 million. And there we are, in discussions with one of our large existing about them taking a 40% stake in this business. So, we are becoming, in a way, a strategic partner for an international big firm to come in and partner alongside us. So, they are also a co-sponsor.
Will you set up an e-mobility platform under NIIF?
We are setting up an e-mobility platform. It’s Avega Mobility Pvt. Ltd. So, we are going to bid for concessions under the PM E-Drive scheme. We will start with concessions, which are being awarded by various states. Also, we are setting up a company that will win a concession, then buy the buses, and the states will provide a depot. Then we will install the charging infrastructure at that depot. It is a big business. Again, it is something which I think we are well qualified to do. In this case, we think we are best placed to do anything that is either operationally or constructionally intensive.
What will be the investment for this?
I think $500-600 million.
Are there conversations happening for co-investment in this?
Yes. The conversation is happening. But it is in its early stages. So, we are going ahead and starting this. See, if you want to raise money in the market today, you have to show co-investment opportunities. Today, we are leading with co-investment opportunities that we are creating on our own. Like transmission, e-mobility…If you can show a meaningful co-investment opportunity, you will be able to raise capital. Even in a difficult market, you can raise capital.
While NIIF is investing in the plumbing of Artificial Intelligence (AI) business, including data centres, why not AI?
I’ll give you a longer answer. Who are my customers? My customers are the people of India. It’s the taxpayer’s money we manage. And then, for example, Canada Pension Plan Investment Board (CPPIB) pensioners are their firemen, teachers…What kind of risk-return do they want from me? The risk-return they want from me today is either an infrastructure investment in a value-added strategy, where I can give them, like, an 18% gross dollar number…I don’t have a pool of capital that can account for the risk-return profile of a deep-tech AI play. But the government, very smartly, has set up this ₹1 trillion Research, Development and Innovation (RDI) Fund, which is geared exactly for this. You take money from RDI, and that can go into deep tech projects…But will we get into, say, funding LLM (Large Language Model) That’s not our play.