Kotak Investment Advisors Ltd (KIAL), the alternative assets arm of Kotak Mahindra Bank, has exited its three-year-old investment in a township project of real estate firm Lodha Group.
Kotak Investment exited the Palava City project, located in a Mumbai suburb, via a buyback. Palava City is a 4,500 acre township, developed as a smart city in the Mumbai Metropolitan Region.
The investment was made through Kotak Realty Fund, which is a part of Kotak Investment Advisors.
In 2015, the fund had invested about Rs 540 crore (around $80 million at the time) in the project from its $400 million offshore fund.
A Mint report stated that Kotak has now exited the investment by taking out Rs 838 crore ($129 million), which amounts to an internal rate of return (IRR) of 18%.
"As per our stated strategy, we are repaying all high cost debt," a Mint report quoted Lodha Group managing director Abhishek Lodha as saying. "We have given the exit as per the agreed terms, at end of the lock-in period. The exit was funded partly by our internal accruals and partly by refinancing. This exit has helped us meaningfully lower our overall cost of funds.”
An email query sent to Kotak Realty on Friday evening did not elicit a response till the time of publishing this report.
The fund's other residential investments include Sunteck Signia Isles, Transcon Developers SRA Project, and Total Environment Building Systems.
Established in 2005, Kotak Realty Fund has raised $1.49 billion in aggregate capital commitments and invested in 45 projects, according to its website.
The Mint report also added that the fund recently exited its Rs 125 crore investment in Gurgaon-based SS Group’s project with an IRR of 21%.
In 2016, Kotak Realty Fund part-exited its eight-year-old investment in Mumbai-based real estate developer Sunteck Realty Ltd at a loss.