Additionality and multiplier considerations

Investments made by the Strategic Opportunities Fund may include greenfield and higher-risk investments than those contemplated by the Master Fund.

INVESTMENT PROCESS

NIIF’s investment process consists of three stages. during stage 1, the deal team working on the transaction analyzes preliminary information to assess the prospective investment and seeks approval from the Investment Committee to spend time undertaking a detailed internal appraisal and finalizing a term sheet. In stage 2, the investment committee approves the nonbinding term sheet and appointment of third-party due diligence advisers. The deal team discusses the due diligence findings with the Investment Committee and gets the committee’s approval to execute the definitive documents in stage 3. deals can be rejected for both financial and ESG-related reasons. as far as risk management is concerned, all Category II aIFs regulated by SEBI must comply with regulatory exposure limits. In addition, each fund managed by NIIF Limited complies with additional exposure limits agreed on with investors.

ADDITIONALITY AND MULTIPLIER CONSIDERATIONS

Notwithstanding its commercial focus, NIIF aims to deliver additionality through several avenues.

• Demonstration effect. By investing on a commercial basis and crowding in commercial investors already at fund level, NIIF aims to demonstrate the feasibility and attractiveness of investing in Indian infrastructure. The initial focus on operating infrastructure, through the Master Fund, aims to maximize this demonstration effect by targeting lower-risk assets. as the demonstration effect plays out in operating assets, NIIF will move on to riskier, greenfield investments through the Strategic Opportunities Fund and, over time, through the Master Fund platform companies. • Demonstration effect for fund-of-funds investment. Similarly, through the

Fund of Funds NIIF aims to demonstrate the feasibility and attractiveness of indirect investing through a portfolio of third-party-managed funds. No fund of fund dedicated to Indian infrastructure exists at the time of writing.6 • Local partner for foreign investors. NIIF can provide a channel for international institutional investors and operators that often find it challenging to navigate the infrastructure sector in India. NIIF believes that, with its good governance and ESG practices, expert team, and high-quality shareholders, it provides investors with a credible, professional counterparty in India. • Access to local governments and networks. NIIF can facilitate access to and dialogue with ministries and other government entities that are important stakeholders and counterparts in infrastructure projects.

NIIF expects to avoid crowding out other sources of private capital for the following reasons.

• Minority government investment. The government is, by design, a minority investor in each NIIF fund and a minority shareholder in NIIF Limited, with only two seats on the board. all other investors in the three funds and