On 8 July 2015, the Russian Direct Investment Fund (RDIF) signed an MoU with the Silk Road Fund from China, Infrastructure Development Finance Company (IDFC) from India, the Development Bank of South Africa and BTG Pactual Fund from Brazil, to form an Infrastructure Fund Initiative (IFI). The IFI will work with sovereign funds and the New Development Bank (NDB) to invest in equity of infrastructure projects. The announcement came from Kirill Dmitriev, director general at RDIF, at the BRICS Business Council meeting in Ufa, Russia.
Akshay Mathur, head of research and geoeconomics fellow at Gateway House, had urged for the same in this piece where he mentioned that “diversified ownership [of infrastructure projects] should also make equity ownership less threatening. That is why equal shareholding is important and India should staunchly defend it.”
In the statement below, he briefly explains why this development is significant for India. He will be available for further comments and interviews.
Statement:
“There is a dire need for equity investments as upfront risk capital for infrastructure projects in India. Thus, any financial instrument that enables foreign equity participation should be welcome.
It is natural to conceive of IFI working with the BRICS NDB – one can provide the equity while the other provides the long-term credit. The two can also share the workload of assessing and monitoring of projects.
This initiative is a perfect entry point for the private sector to partner on projects, as it will find better terms of engagement, especially for investment rating and in project execution.
For the governments, investments made through this multilateral fund will be more appealing than the current method of direct investments made by a foreign government-owned enterprise in strategic infrastructure assets like ports and power plants.
The IFI can grow to become like the International Finance Corporation (IFC), which is the International Monetary Fund’s (IMF) arm for private equity investments.”
For further information or interview requests, please contact:
Reetika Joshi
joshi.reetika@gatewayhouse.in
+91 88793 61671
Ashna Contractor
c.ashna@gatewayhouse.in
+91 98201 83002