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As real estate IPOs are getting tougher and as commercial banks are tightening their cash flows to the real estate sector, more and more alternative investment funds are being formed to finance the cash-starved property market. Kotak Realty Fund is raising a new $350 million real estate fund, which is expected to close next month, reports Reuters. This fund will develop property projects as joint ventures, besides taking stake in developers. It's a 7-year fund, and is targeting an IRR of 25 per cent.

The fund's chief investment officer Hari Krishna told Reuters that they hoped to attract pension funds and other institutional investors, mostly from Europe, to the fund. Kotak's first fund had invested $10 million in Delhi-based Lemon Tree Hotels along with private equity group Warburg Pincus.

Kotak had last year raised a $100-million real estate fund. This fund had invested $10 million in Delhi-based Lemon Tree Hotels along with private equity group Warburg Pincus.

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Kotak Mahindra Raises $100 Million In Domestic Tranche For A New Real Estate Fund

Kotak Mahindra To Raise Its Second Real Estate Fund; To Raise $350 Million