Kotak Special Situations Fund (KSSF), part of the alternative investment arm of Kotak Group, will invest Rs 1,000 crore (around $135 million) in Sify Infinit Spaces Limited (SISL), a wholly-owned subsidiary of Sify, Kotak said in a statement.
With this transaction, KSSF has invested over 75% of its $1 billion (around Rs 7,130 crore) fund, closing its 10th deal from the fund.
Under the transaction, the KSSF investment will be in the form of compulsorily convertible debentures which will convert into equity based on the operational performance of SISL over a specified reference period, the statement said.
It added that the funds would be used to invest in SISL’s current plan under execution for developing new data centres in Mumbai, Noida, Chennai, Bangalore and Hyderabad and for investment in renewable energy requirements for operational and new data centres for up to Rs 4,000 crore ($530 million).
SISL is among leading data centre services players in India, serving Indian and global enterprise customers and hyperscalers from its ten operational data centres across the country. Sify has facilitated more than 10,000 businesses across multiple verticals of data centres, networks and security services and conducts their business from more than 1,600 cities in India.
In September, KSSF had invested Rs 1,000 crore ($130 million) in homegrown logistics firm TVS Supply Chain Solutions.
Raju Vegesna, chairman and managing director, Sify, said, “India is set for significant economic growth and is becoming the first choice destination for both global businesses and investors. India is witnessing the rise of Information technology-driven entrepreneurship and business growth. The current capacity of the Data Centre industry in India is expanding at an unprecedented pace, powered by wider cloud adoption, 5G rollout and accelerated digital transformation programmes of enterprises. We are delighted to partner with KSSF as a part of this journey to build world-class Data Centre facilities for our customers to benefit from the large-scale digital transformation of India.”
MP Vijay Kumar, chief financial officer, Sify said, “The KSSF partnership will give us access to long-term capital, beyond the present investment. We will, as always, be prudent in our business judgments and build facilities close to assessment of customer demand and in a modular way, deploying the latest and most cost-effective technologies for both design and operations.”
Internationally, Sify has a presence across North America, the United Kingdom and Singapore.
Eshwar Karra, CEO-Kotak Special Situations Fund, Kotak Investment Advisors Limited (KIAL), said, “Our investment in SIS is in line with our strategy of providing capital to unique India opportunities that require flexible and customised capital solutions, which enables us to grow with our partners and participate in their success while providing value-added support and opportunistic capital in size and scale.”
KIAL, a part of the Kotak Mahindra Bank, focuses on the alternative assets business. KIAL was set up in early 2005 to bring a sharper focus to Kotak’s alternative assets practice.
Since then, it has raised/managed/advised in aggregate over $4.9 billion across different asset classes including private equity funds, real estate funds, infrastructure funds, special situations fund, listed strategies and investment advisory.
Kotak Special Situations Fund
KSSF hit the final close of its $1 billion fund in August 2019. The fund focuses on special situations, credit and distressed spaces in India. In January 2020, it struck its debut deal.
Among the recent exits, the fund is likely to have made multiplied its returns on its year-old investment in cement firm Nuvoco Vistas Corp Ltd’s IPO.
In May, KSSF had announced its eighth deal to acquire 74% stake in stressed HKR Roadways owned by a consortium led by Gayatri Group.
Earlier this year, the fund had struck a deal to invest in a nutraceuticals business backed by the Sanjaya Mariwala family.
