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National Investment Fund launched

NEW DELHI: Over two years since approval of its creation, the National Investment Fund (NIF) was launched on Saturday and made operational by Finance Minister P. Chidambaram. With the disinvestment proceeds of Power Grid Corporation of India Ltd. (PGCIL) coming in, cheques were handed over to the CEOs of the three asset management companies (AMCs) — the UTI Asset Management Company Pvt. Ltd., the SBI Funds Management Pvt. Ltd. and the LIC Mutual Fund Asset Management Company Ltd.

The three AMCs have been appointed as fund managers for NIF, initially for two years, but extendable later on the basis of their performance. Separate agreements were signed with each fund manager.

As was announced earlier, all proceeds from disinvestment of Central public sector enterprises (CPSEs) are to be routed to NIF. The fund is to be maintained outside the Consolidated Fund of India and managed professionally to provide sustainable returns to the Government, without any depletion of its corpus. Also, as decided earlier, 75 per cent of the annual income of the fund is to be used for financing select social sector schemes in the field of education, health and employment. The balance 25 per cent is to be utilised to meet the capital investment requirements of profitable and revivable CPSEs.

The NIF would be operated by select fund managers under the discretionary mode of the portfolio management scheme (PMS), which is governed by SEBI guidelines.

The total amount of Rs. 994.82 crore received from the sale of Government equity in PGCIL was handed over to the fund managers by Mr. Chidambaram. The UTI AMC and the SBI entity received Rs. 368.91 crore each, while the LIC Mutual Fund Asset Management Company Ltd. got Rs. 257 crore.

A part-time advisory board has also been set up to advise the NIF CEO on various aspects of functioning of the fund such as investment strategy, allocation of funds to select fund managers, negotiation of management fee and charges to be paid to the fund managers. The advisory board comprises former LIC Chairman S. B. Mathur, former Oriental Bank of Commerce Chairman B. D. Narang and President, RPG Foundation and Chairman International Life Science Institute, India, D. H. Pai Panandiker.

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