2015 Fund created
2018 Temasek invested US$400M
This is not about a troubled asset of Temasek. It is just a brief overview of the investment and you, dear readers, form your own opinion.
NIIF was set up by the Indian Government in 2015. The National Investment and Infrastructure Fund Ltd owns the assets and manages the fund. The government commits an inflow of 20,000 core rupees to hold 49% of the shares, the rest from institutional investors both local and foreign. (1 core = 10,000,000). It's a brave and decisive attempt by PM Modi to spur the development of poor infrastructure in the country.
NIIF projects will be implemented strictly on commercial basis. It is splint into 3 asset specific funds:
- Master Fund
- Fund of Funds
- Strategic Investment Fund
Temasek's investment is in the Master Fund so I'll restrict the comment to this fund. It is an infrastructure fund with the objective of primarily investing in operating assets in the core infrastructure sectors such as roads, ports, airports, power etc.
Infrastructure funding for third world countries is one of the most risky investment with long drawn out gestation and low ROI. There is heightened political risk, normally when there is a regime change. (Temasek has had a taste of such political risks in the cancellation of the Andra Pradesh township project). Such projects are mostly undertaken by multilateral development banks such as the World Bank, Asian Development Bank, European Bank for Reconstruction and Development etc. The objective of these institutions is to enable the economic development of poorer countries. They are in a position to offer not just financial support but also professional advice for economic and social development of the needs of these countries. Temasek's objective should be purely investing to grow our reserve dollars.
Third world countries that try to go it alone does it with a national development bank which are often loss making as their role requires supporting subsidy policies of the government. We had the Development Bank of Singapore which by now is a full-fledged commercial bank. India has no national development bank.
NIIF currently manages about US$4B. The first project of the Master Fund is a US$3B ports and logistics platform. It has formed Hindustan Infralog Private Limited (HIPL) to handle this project in partnership with DP World, a Dubai-owned global operator of container terminals and the largest player (by volume) in the Indian container terminal market. HIPL seeks to build a US$3B equity interest in entire ports and logistics value chain. It is on an acquisition trail.
The Dubai SWF pumped in a US$1B into the NIIF Master Fund and its DP World gets a plump reward. Temasek participated in the fund much earlier than Dubai. It pumped in US$400M and gets nothing. First to subscribe, but unable to upsell the services of Singapore's PSA.
The HIPL project has no semblance of infra building but more like 'nationalisation' of existing businesses in the ports and logistics value chain. It is out to gobble up the SMEs.
Temasek's investment is defined by six structural trends as show in the chart taken off their website.
2018 Temasek invested US$400M
This is not about a troubled asset of Temasek. It is just a brief overview of the investment and you, dear readers, form your own opinion.
NIIF was set up by the Indian Government in 2015. The National Investment and Infrastructure Fund Ltd owns the assets and manages the fund. The government commits an inflow of 20,000 core rupees to hold 49% of the shares, the rest from institutional investors both local and foreign. (1 core = 10,000,000). It's a brave and decisive attempt by PM Modi to spur the development of poor infrastructure in the country.
NIIF projects will be implemented strictly on commercial basis. It is splint into 3 asset specific funds:
- Master Fund
- Fund of Funds
- Strategic Investment Fund
Temasek's investment is in the Master Fund so I'll restrict the comment to this fund. It is an infrastructure fund with the objective of primarily investing in operating assets in the core infrastructure sectors such as roads, ports, airports, power etc.
Infrastructure funding for third world countries is one of the most risky investment with long drawn out gestation and low ROI. There is heightened political risk, normally when there is a regime change. (Temasek has had a taste of such political risks in the cancellation of the Andra Pradesh township project). Such projects are mostly undertaken by multilateral development banks such as the World Bank, Asian Development Bank, European Bank for Reconstruction and Development etc. The objective of these institutions is to enable the economic development of poorer countries. They are in a position to offer not just financial support but also professional advice for economic and social development of the needs of these countries. Temasek's objective should be purely investing to grow our reserve dollars.
Third world countries that try to go it alone does it with a national development bank which are often loss making as their role requires supporting subsidy policies of the government. We had the Development Bank of Singapore which by now is a full-fledged commercial bank. India has no national development bank.
NIIF currently manages about US$4B. The first project of the Master Fund is a US$3B ports and logistics platform. It has formed Hindustan Infralog Private Limited (HIPL) to handle this project in partnership with DP World, a Dubai-owned global operator of container terminals and the largest player (by volume) in the Indian container terminal market. HIPL seeks to build a US$3B equity interest in entire ports and logistics value chain. It is on an acquisition trail.
The Dubai SWF pumped in a US$1B into the NIIF Master Fund and its DP World gets a plump reward. Temasek participated in the fund much earlier than Dubai. It pumped in US$400M and gets nothing. First to subscribe, but unable to upsell the services of Singapore's PSA.
The HIPL project has no semblance of infra building but more like 'nationalisation' of existing businesses in the ports and logistics value chain. It is out to gobble up the SMEs.
Temasek's investment is defined by six structural trends as show in the chart taken off their website.
If the chart is too small to view, don't bother to squint your eyes in vain. I'm just trying to point out this US$400M investment in the NIIF does not fall within the scope of investment that interest Temasek. So the question is what then is it all about? I posit that it is an accommodation to the Indian government. In Hokkien we call this "Eng Chiew". Why else pour this money into something with high political risk, long gestation period for returns, no easy exit pathways, and outside their interest area for investment. Singapore has bent so far back to placate the Indians with CECA, what's a peanut contribution to the NIIF if it facilitates Temasek to invest more and pour more capital into the sub-continent.
There is a saying "India has little roads and rails and trains. It has a lot of laws. It has a lot of corruption." We should wish our Indian friends well with their infrastructure development. But we are unlikely to see returns on this investment for many many long years to come. That's my opinion.
There is a saying "India has little roads and rails and trains. It has a lot of laws. It has a lot of corruption." We should wish our Indian friends well with their infrastructure development. But we are unlikely to see returns on this investment for many many long years to come. That's my opinion.
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