INDIA BUSINESS WORLD - March 16^th - March 31^st - 2008

KOTAK ARM RAISES $440 M FOR PE BUYS

Kotak Investment Advisors Ltd (KIAL) has raised $440 million in a fund to invest in private equity opportunities, taking its total corpus under management to $1.4 billion. Kotak will continue its focus on investing in small and medium enterprises, mostly unlisted, a top official said. The fund has been raised entirely from institutional investors and high networth individuals in India who are Kotak Mahindra’s clients.

Compared to three years ago when the emphasis of investment was on global themes, private equity strategy is increasingly shifting to domestic opportunities, C Jayaram, head of KIAL and executive director at Kotak Mahindra Bank, said “We believe that is where the growth story is. Our sweet spot will also continue to be investments in range of $10 m-$30 m,” he said.

Another $250 million will be raised from overseas investors by September. “The India story is now very strong and has even percolated to Scandinavian countries. So, we don’t need to sell India anymore. We only need to sell our product,” Mr Jayaram said. The firm has organised its business under two heads—real estate and private equity. The private equity group has two other funds, a $160-million fund that invests across sectors and a $68-million fund focused only on biotech. With the closure of the third fund, KIAL now has approximately equal amounts in both groups. It intends to launch a third group focussed only on investments in the core infrastructure sector with a corpus of $1 billion.

“There is a lot of interest globally in core infrastructure sectors such as ports, roads and power. There is a segment of investors that want to invest only these projects,” he said. In real estate, where it has a total of $700 million under its management, Jayaram said that while opportunities were still available, fund managers needed to be more discerning when making investments.