Kotak fund boasts of over Rs 2,300-crore commitments, to deploy in residential, commercial, retail, hospitality projects

Kotak realty fund (KRF) has received commitments worth a significant amount from marquee investors over and above the Rs 2,300 crore it has raised as part of its two new funds, chief executive officer (CEO) Vikas Chimakurthy told FE in an interaction on Tuesday. KRF has already deployed part of the funds and has ample liquidity that is yet to be deployed.

“With the additional capital that we have, we can do credit, we can do distressed, etc. If we get the right opportunity, our investors will invest along with us,” he said. The fund is trying to deploy these funds in residential projects, commercial projects, retail, hospitality segment and distressed assets.

KRF recently exited all investments in its Managed Account Fund for its marquee institutional investors including sovereign wealth funds who anchored the fund. It had total commitments of $356 million with an objective of investing in structured credit in the Indian real estate market. However, it only invested about $250 million and did not draw down the rest of $106 million.

“We told investors that there was already too much liquidity in the market and we could not find the right opportunity. We returned part of the capital,” Chimakurthy said.

The deployments were done in 2014 and there were close to five investments. The capital was invested across different properties in Chennai, Mumbai, NCR and Bangalore.

Chimakurthy also pointed out that although the fund period was still on, they decided to exit their investments considering the faltering market conditions. “The investment period was still on. But, we saw that the market was getting further down and hence we thought it was prudent to get out. The exits have been happening over the last one to two years. The last of the investment was exited last week,” he said.

The firm refused to disclose the total amounts received on the exits but said that the internal rate of return was 19% across investments. The aggregate exits generated by Kotak across funds and investments are in excess of Rs 6,000 crore. According to KRF, this is the largest volume of exit by any Indian real estate fund manager across various funds.

The fund is part of the alternate assets management business of Kotak Mahindra Bank. It was established in 2005, and focuses solely on investments in real estate across different asset classes and cities in India. The fund has raised in aggregate over $1.62 billion.