Kotak Group's alternative assets unit Kotak Investment Advisors Ltd has announced the first close of its second strategic situations fund, having raised three-fourth of the corpus it targeted during launch.
KIAL, domiciled in Gujarat's Gift City, has raised $1.25 billion (around Rs 10,200 crore) for its category-II AIF, Kotak Strategic Situations Fund II (KSSF II). The company is aiming to raise $1.6 billion (around Rs 1,135 crore) for this fund, a tad higher than $1 billion raised for KSSF I, four years ago.
Last month, VCCircle reported that Kotak’s investment arm’s existing investors Abu Dhabi Investment Authority (ADIA), along with Singaporean wealth fund GIC and PremjiInvest, are understood to have made anchor commitments of around $1.2 billion.
The sector-agnostic fund will provide strategic solution capital in equity, debt and hybrid options to growth and value companies, KIAL said in a statement.
“The performance of the Kotak Special Situations Fund has seen significant commitments from international investors, including sovereign wealth funds & pension funds investing in KSSF’ follow-on fund (KSSF II), KIAL’s statement added.
As for its domicile, the fund is registered at the Gift City because of special dispensations to AIFs to equip them with higher operational flexibility and help maintain tax efficiency.
“Riding on the success of the first Special Situations Fund, our investors have reposed faith in us by re-upping their commitments in the second fund. In-line with the changing market, the fund is now positioned to provide strategic solution capital for unique circumstances and to finance the impending capex growth cycle that we expect to play out over the next couple of years,” said Eshwar Karra, chief executive officer, Kotak Special Situations Fund, KIAL.
In February, KSSF marked its full deployment making a total of 14 investments concluding with its Rs 1,070 crore (about $129 million) fund infusion in Kiran Mazumdar Shaw-led Biocon Ltd. Its other bets include speciality chemicals firm DCW, listed cement player Sanghi Industries Ltd, AGS Transact Technologies, Sify Infinit Spaces Ltd, Gold Plus Glass Industry Ltd, logistics firm TVS Supply Chain Solutions, Nuvoco Vistas Corp Ltd, stressed HKR Roadways owned by a consortium led by Gayatri Group, among others.
KIAL, a part of Kotak Mahindra Group, focuses on alternate assets management and investment advisory businesses. The alternative assets division was the prime driver of the Kotak's overall asset management business over the last one year. The firm's AUM under alternative assets shot up from Rs 19,999 crore as of 31 December, 2021 to Rs 32,137 crore as of December 31, 2022.
Rahul Chhaparwal, executive director at Kotak Special Situations Fund, further said that global capital availability and the return parameters that meet a relative value proposition for India has changed in the last six months. “Domestic capital availability will also recalibrate basis the latest budget announcements. This fund raise has come at an appropriate time to serve corporate India with a unique positioning.”
KIAL was set up in early 2005 and has raised/managed/advised over $8.7 billion across different asset classes including private equity, real estate, infrastructure, special situations and listed strategies.
"In FY23, Kotak Alternate Asset Management has successfully closed five large value funds aggregating over $3.6 billion of global capital targeting investment across industries and sectors like infra, real estate and data centres. This close of KSSF II will take the aggregate funds raised to over $8.7 billion,” said Srini Sriniwasan, managing director at KIAL.
