Kotak Realty Fund, the property investment arm of Kotak Mahindra Bank, has raised Rs 523 crore($100 million) from domestic investors, to invest in high yield debt instruments of residential projects followed by commercial properties, the company said in a statement.
“The financing constraints facing the real estate sector will help provide the fund with attractive investment opportunities and we expect deal flow activity to remain robust,” Vikas Chimakurthy, director, Kotak Realty Fund commented on the development.
Incorporated in 2005, Kotak Realty Fund is one of India's first real estate focused private equity firm with $850 million in assets under management. So far the realty fund has invested in more than 23 projects/companies across different asset classes and geographies.
Although the private equity action in Indian real estate sector has been muted, there have been a few large deals besides a string of small and mid-sized deals this year across income-generating developments.
In February this year, Ascendas India Trust entered a deal to acquire a portfolio of five buildings in Phoenix Infocity Pvt Ltd’s SEZ for Rs 855 crore. Kotak Realty Fund sold Peepul Tree Properties (an IT park in Goregaon) to Tata Realty and Infrastructure Ltd and Tata Realty Initiatives Fund 1 for Rs 525 crore.
Few weeks ago, Pragnya Fund, real estate-focused private equity fund, invested around $5 million (Rs 26 crore) in Hyderabad-based Vision Heights Ltd to develop a 50-acre township in Rajahmundry, Andhra Pradesh.
In October this year, Ambuja Realty acquired the RMZ block of Ecospace Business Park in New Town (Rajarhat), Kolkata, for an undisclosed sum. Also in September, Chennai-based Kalpathi Group, with business interests in private equity and entertainment, acquired the IT park Rantech Towers for around Rs 50 crore.
Even as dealflow in realty market has not been very active, other financial groups are looking to tap into the opportunity for the future. Last week, ArthVeda Fund Management, a unit of Dewan Housing Finance Corp said it plans to raise Rs 200 crore to invest in greenfield real estate projects.