Kotak Realty Fund eyes final closure of $400M offshore fund in six months

Kotak Realty Fund, the real estate private equity fund of Kotak Mahindra Group, expects to close its international fund in six months, a top company executive told VCCircle. The fund has already received commitment of $200 million from Abu Dhabi Investment Authority (ADIA) to mark the first close of the fund. ADIA is one of the two sovereign wealth funds of UAE representing Abu Dhabi and an active investor in India through public market deals.

V Hari Krishna, director, Kotak Realty Fund, said the firm is looking to raise $400 million from overseas investors but declined to share details of other LPs it is in negotiations with for the rest of the fund.

He said the fund will invest an average of $15-20 million in each project and that it will put in money from the first close in 10-12 projects.

The fund is looking to generate an IRR of 20 per cent for investors of the new fund.

The Kotak Mahindra group has invested $30 million in the fund. Kotak Realty Fund will be investing in projects across Delhi, Mumbai, Bangalore and Pune. It will mark investments purely in the residential segment and it has already started vetting deals to invest from the money it has raised.

The realty fund has a lifeline of 10 years and will start investing while raising the rest of the capital.

The fund, which has been on the road since last year, is the second domestic real estate-dedicated fund to come back with significant capital commitment from overseas investors. HDFC’s realty fund received commitment from the sovereign fund of Oman.

Most fund houses, including sovereign funds, are looking to tap LPs in the Middle East to raise capital to invest in the Indian realty space against the past when capital had been pooled in from pension funds, endowment funds and institutional investors in North America and Europe.

(Edited by Joby Puthuparampil Johnson)

Leave Your Comment(s)