ADIA-backed Kotak Investment garners $1bn for first debt fund

The Indian fund manager is targeting NPLs and structured financing opportunities.

Kotak Investment Advisors, a Mumbai-based subsidiary of Kotak Mahindra Group, an Indian financial services conglomerate, held a final close on $1 billion for its special situations fund yesterday, a spokesman for the firm told Private Debt Investor.

The Kotak Special Situations Fund was launched in February this year to target both non-performing assets and businesses that need to be recapitalised to prevent them from entering insolvency.

Its investor roster includes sovereign wealth funds, Indian family foundations and Kotak Mahindra Group. It was confirmed to PDI on 26 June that Abu Dhabi Investment Authority had anchored the fund with a capital commitment of $500 million. It is understood that the commitment was made via a wholly owned subsidiary of the sovereign wealth fund.

Eshwar Karra, chief executive of the Kotak Special Situations Fund, said in February that a pipeline of transactions for the fund was coming through the Insolvency and Bankruptcy Code process. He added that other transactions from outside the IBC process were coming through to the fund as structured financing for settlements.

As PDI reported in July, both domestic and international investors have increased their appetite for Indian distressed and special-situations investments and are committing capital via joint ventures or to alternative investment fund vehicles.

Distressed and special-situations funds in India fall within the category of type II alternative investment funds. Official data as of Q1 2019 showed the latest cumulative type II fundraising figure to be INR 2,053.6 billion ($30 billion; €26.6 billion) in total commitments.

Other asset allocators, including Allianz Investment Management and Caisse de dépôt et placement du Québec have also gained Indian distressed debt exposure via AIFs.

Established in 2005 as the Kotak Group’s asset management company for alternative assets, Kotak Investment Advisors has raised $3.5 billion in capital commitments across private equity, real estate, infrastructure, special-situations and listed-asset investment strategies.

Kotak Investment Advisors’ funds have invested in more than 104 projects and companies across various industry sectors.