Saturday, May 18, 2024

Kotak Strategic Situations Fund II marks first close, raises $1.25 bn

Kotak group’s alternative assets unit Kotak Investment Advisors Limited (KIAL) has announced the first close of Kotak Strategic Situations Fund II IFSC (KSSF II), raising $1.25 billion (approximately 10,200 crore) to provide strategic solution capital across growth and value companies.

Domiciled in Gujarat’s GIFT City, KSSF II is a category II AIF (alternative investment fund) with a target to raise $1.6 billion corpus. The sector-agnostic fund will provide equity, debt capital and hybrid capital, KIAL said in a statement. A fund registered at the GIFT city is granted with special dispensations to AIFs to equip them with higher operational flexibility and help maintain tax efficiency.

Last month, VCCircle reported that Kotak’s investment arm’s existing investors Abu Dhabi Investment Authority (ADIA), along with Singaporean wealth fund GIC and Premji Invest, are understood to have made anchor commitments of around $1.2 billion.

“The impressive 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.

The new fund size is a notch higher than its previous $1 billion Kotak Special Situations Fund (KSSF) launched four years ago.

In February, KSSF marked its full deployment making a total of 14 investments concluding with its 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.

“Riding on the success of the first Special Situations Fund, our investors have reposed faith in us by re-upping their large 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, CEO-Kotak Special Situations Fund, KIAL.

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, a part of Kotak Mahindra Group (Kotak), 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 19,999 crore as of 31 December, 2021 to 32,137 crore as of December 31, 2022.

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 FY2023, Kotak Alternate Asset Management has successfully closed five large value funds aggregating ~$3.6 billion of dedicated 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. Kotak Alternate Asset Management is establishing itself as India’s largest Multi Asset Manager for discerning Investors,” said Srini Sriniwasan, Managing Director at KIAL.


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