Private equity group TPG has offered to acquire the Indian government-owned National Investment and Infrastructure Fund’s (NIIF) infra finance arm, three sources told Infralogic.

The California-based investor has submitted a non-binding offer, and due diligence is not likely to take more than two months, two of the sources said.

Aseem Infrastructure Finance has a predominantly green loan book of around INR 140bn-INR 150bn (USD 1.5bn-USD 1.6bn), and a potential deal value may be around one and a half times that amount, one of the two sources said, adding that it will likely consummate the deal through one of its TPG Rise Climate funds.

While TPG is leading the discussions with the NIIF, it may rope in GIC as a partner, both sources said.

The Singapore sovereign wealth fund and TPG have a history of investing together, including in Asia Healthcare Holdings, and are sometimes co-investors in the same TPG-managed funds, such as TPG Rise Climate.

Established in 2020, Aseem’s shareholders are the NIIF, which holds 59%; the government of India, which owns 31% through a direct investment; and Sumitomo Mitsui Banking Corporation (SMBC), which has 10%.

The NIIF and the Indian government are both likely to exit, two of the sources said, with both adding that they are unaware of SMBC’s plans.

TPG has been looking to enter the infra finance segment in India for the last year or so with an intention to lend to green, or environmentally friendly projects, local media reported earlier this year.

It received a licence to operate as a non-bank financial company from India’s central bank about a month or so earlier, one of the sources said.

TPG has been in talks with Indian banks to partner with them for the deal, so it can lower its own cost of capital, the source added.

While TPG wants to put in around USD 1bn equity, it will leverage this to raise around four times the amount in debt capital.

Aseem was established with startup equity from the NIIF of INR 13bn from its Strategic Opportunities Fund. The Indian government infused INR 10bn in two rounds and SMBC INR 3.5bn.

Over the last year, NIIF has been looking to exit and has elicited interest from multiple development finance institutions for primary equity of around USD 100m. That option was rejected as it wants a complete exit.

TPG and SMBC declined to comment.

The NIIF, GIC, Aseem Infrastructure, and India’s Ministry of Finance did not respond to requests for comment.