News: Kotak to double pvt equity fund corpus

(DNA 30/08/2006) Hyderabad - Kotak Mahindra Bank is looking to almost double the size of its private equity funds - the India Growth Fund (IGF) and the Kotak Realty Fund - by the end of the year. Together worth $325 million at present, the fund house is set to touch $700 million.

Almost half the money raised will go towards tapping investment opportunities in the real estate sector, with individual deal sizes ranging between $5 million and $10 million, Nitin Deshmukh, head of private equity at Kotak Mahindra Bank, said.

The $225 million IGF was launched in late 2004 in partnership with SEAF Management LLC, USA. It was aimed to invest primarily in dynamic and fast-growing sectors.

Kotak Realty Fund, which has got capital commitments worth $100 million and is still in the market, was launched in May last year to seek equity investments in development projects, enterprise level investments in real estate operating companies and real estate intensive businesses.

Competition for real estate investments is set to get aggressive with ICICI Ventures’ $300 million property fund, the Rs 1,464 crore HDFC Property Fund, the Rs 500 crore Anand Rathi Realty Fund, IL&FS’s property fund, being the other major domestic players.

Kotak’s IGF has concluded seven transactions so far with almost 70% of its initial corpus yet to be invested. The realty fund has already closed three deals in the range of $10 million each, Deshmukh told DNA Money in Hyderabad on Tuesday.

“We are seeing excellent deal flows in the real estate sector and our focus will be on it,” said Deshmukh.

However, the strategy is to invest in projects that are mostly in non-metro centres and away from mainline activity with lower entry points, unlike in cities like Hyderabad where property prices have skyrocketed over the past few months, Deshmukh explained.