Investment principles of the Regional Infrastructure Fund

The RIF will differ to previous regional development funds by having a primary focus on capital investments using loans and equity instruments to support project implementation and success. Grants will be considered only in limited cases.

The RIF will support projects unable to secure viable finance elsewhere. Investment structures will aim to accelerate projects that would not otherwise happen.

It is important to remember, if applicants are successful in receiving a funding offer from the RIF, they may not receive their favoured funding arrangement.

The RIF will prioritise loans and equity ahead of grants, because:

• debt and equity provide capital assets on the Crown bank sheet and a means for return of capital, which can then be re-used for future investments; and
• debt and equity ensure strong commercial incentives on RIF co-investors and enable use of well-established contractual arrangements and transparency mechanisms.

The RIF will generally prioritise loans ahead of equity, because:

• the return of capital is more specifically contracted for loans than equity;
• the loans can limit the risks to which they are exposed; and
• it generally avoids the complexities of ownership (exit strategy, valuation, voting, directorship).

In some cases, investment may be structured as a mix of funding options.

The Regional Development Ministerial Group will consider advice from officials recommending the most appropriate investment arrangement for each project proposal, determined as part of a detailed financial and management assessment.