Mumbai: The government today launched the National Investment Fund (NIF), which would channelise proceeds from government divestment in all public sector undertakings. NIF was launched at a function presided over by finance minister P Chidambaram in New Delhi today.

The finance minister also handed over a total amount of Rs994.82 crore received from the sale of government equity in Power Grid Corporation of India to three fund managers - UTI Asset Management Company (Rs368.91 crore), SBI Funds Management (Rs368.91 crore) and LIC Mutual Fund Asset Management (Rs257.00 crore).

NIF will utilise 75 per cent of its annual income to finance select social sector schemes that promote education, health and employment. The remaining 25 per cent will be used to meet the capital investment requirements of profitable and revivable central public sector enterprises.

NIF will be operated by the fund managers under discretionary mode of the portfolio management scheme, which is governed by Sebi guidelines.

UTI Asset Management Company Pvt. Ltd., SBI Funds Management Pvt. Ltd. and LIC Mutual Fund Asset Management Company Ltd will act as fund managers for NIF, initially for a period of two years, which would subsequently be extended on the basis of their performance.

NIF will be maintained outside the Consolidated Fund of India and will be professionally managed to provide sustainable returns to the government, without depleting the corpus.

The three AMCs signed separate agreements for portfolio service management and fund management with the joint secretary, divestment department of the finance ministry.

The finance ministry also announced the setting up of a part time advisory board to advise the CEO, NIF on various aspects of functioning of the NIF, viz., investment strategy, allocation of funds to the selected fund managers, negotiation of management fee and charges to be paid to the fund managers.

The advisory board has former chairman of LIC SB Mathur, former chairman of Oriental Bank of Commerce BD Narang, RPG Foundation president, and chairman of International Life Science Institute, India D H Pai Panandiker as members.
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