Abu Dhabi’s sovereign wealth fund is investing US$1bn (€850m) to become the first institutional investor in India’s National Investment and Infrastructure Fund (NIIF).

The Indian government said Abu Dhabi Invesmtent Authority (ADIA) had signed an agreement this week, making if the first institutional investor in NIIF’s Master Fund and a shareholder in the fund’s investment management company.

Six domestic investors will join ADIA: HDFC Standard Life Insurance Company, HDFC Asset Management Company, Housing Development Finance Corporation, ICICI Bank, Kotak Mahindra Old Mutual Life Insurance, and Axis Bank.

The Indian and UK governments are both committing £120m (€135m) to NIIF through their joint India-UK Green Growth Equity Fund, announced earlier this year.

Other investors have signed memorandums of understanding with NIIF. They include the government of United Arab Emirates, Russian state-owned Rusnano, Qatar Investment Authority, the Russian Direct Investment Fund, and Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development.

India is seeking to bring in foreign investment to help build its domestic infrastructure and it hopes to grow NIIF to around US$6bn. The government said it will provide 49% of total commitments.

The Secretary of Economic Affairs Shri Subhash Chandra Garg said: “This is a significant milestone in operationalisation of NIIF. This agreement paves the way for creating significant economic impact through investment in commercially viable infrastructure development projects.”

NIIFTL, the trustee of the fund, and NIIFL, the investment management company, were incorporated in 2015. A governing council has been set up under the chairmanship of the union Finance Minister Shri Arun Jaitley to act as an advisory council to NIIF.