India’s sovereign wealth fund National Investment and Infrastructure Fund (NIIF) will be investing around Rs 2,250 crore (around $300 million) to acquire around 22.5% in Hindustan Ports Pvt. Ltd (HPPL), a wholly-owned subsidiary of UAE government-controlled firm DP World.
The transaction is subject to customary completion conditions and is expected to close by Q1 CY2023.
NIIF Master Fund will infuse the amount as primary capital. “With this transaction - also the master fund’s single-largest investment - NIIF’s investment under this partnership will reach around $500 million (about Rs 3,500 crore),” both companies said in a statement.
In January 2018, NIIF and the Dubai-based port operator DP World created a $3 billion (nearly Rs 19,100 crore then) platform to invest in ports, terminals, transportation and logistics businesses in India.
The latest investment from NIIF Master Fund extends the existing DP World and NIIF partnership, formed through the creation of Hindustan Infralog Pvt. Ltd (HIPL) in 2018, which made substantial investments in rail logistics, multi-modal logistics parks, container freight stations, economic zones, cold chain infrastructure and contract logistics to create a market leading integrated logistics platform.
HPPL is among India’s leading container terminal platforms with a proven track record of growth over the long-term. The entity operates five container terminals managing more than five million TEU (twenty-foot equivalent unit) of capacity and representing a national market share of over 20%. The terminals are in strategic growth locations including Mumbai (two), Mundra, Chennai and Cochin.
The primary capital raised through this transaction will aid in new infrastructure development, drive supply chain efficiencies and support future growth initiatives of HPPL. The investment in this combined entity will improve cargo connectivity which will deliver cost efficiencies and an enhanced customer experience, the statement added.
“The investment (in HPPL) will enable NIIF’s domestic and international investors to have a meaningful exposure in the sector through a unique and scalable platform with a significant presence across sea-based container terminals and land-based container logistics infrastructure,” said Sujoy Bose, managing director and chief executive officer at NIIF.
Anchored by the government, NIIF currently manages over $4.3 billion of equity capital commitments across its three funds – Master Fund, Fund of Funds and Strategic Opportunities Fund. Master Fund is one of India’s largest infrastructure funds, that invests in high quality businesses and assets across core infrastructure sectors, via both operating and greenfield opportunities.
In December 2020, NIIF Master Fund marked its final close at $2.34 billion (Rs 17,293 crore), with Canadian pension fund Public Sector Pension Investment Board (PSP Investments), US International Development Finance Corporation (DFC) and Axis Bank, among its Limited Partners (LPs). Its other key LPs include Abu Dhabi Investment Authority (ADIA), AustralianSuper, CPP Investments, Ontario Teachers’ Pension Plan, Temasek, HDFC Group and ICICI Bank.
“Since the beginning of this partnership with NIIF, we have made significant progress in building an inland logistics infrastructure network of great scale that complements our container ports platform. Notably, the opportunity landscape in India remains significant and this transaction will allow us to accelerate investment across ports and logistics to drive returns for our respective stakeholders,” said Sultan Ahmed Bin Sulayem, group chairman and CEO of DP World.