Kotak Mahindra group jumps into real estate; makes its first foray with $400 million kitty

KIAL, an arm of Kotak Mahindra Bank, said in a statement that it has launched a new fund which will partner with Bengaluru-based realty firm DivyaSree Developers to develop and acquire commercial office assets. “The USD 400 million India Office Assets Fund I, is anchored by a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) and is one of the largest dedicated commercial office development platforms announced in India,” it added.

DivyaSree is the exclusive development partner and property advisor for the fund and KIAL will act as the investment manager. It is structured as an Alternative Investment Fund under SEBI regulations. The fund’s strategy is to develop greenfield projects as well as acquire under construction and completed assets across key markets in India.

When contacted, Kotak Realty Funds CEO Vikas Chimakurthy said, around USD 200 million would be infused by ADIA and the rest would be pumped in by KIAL and DivyaSree.

He said projects are being identified for development and the target is to deploy this fund as quickly as possible.

Chimakurthy said: “We have a compelling opportunity to develop and operate quality commercial assets for marquee global customers. This is the first time in India where a financial institution and a developer have come together on a fund platform.”

The commercial real estate has been performing well and attracting huge investments since the last few years, despite an overall slowdown in the property market. Leading player Embassy Office Park, a JV of Blackstone and Embassy has currently launched its REIT to raise Rs 4,750 crore.

DivyaSree Developers MD Bhaskar N Raju said: “We currently provide quality commercial spaces across South Indian cities of Bengaluru, Hyderabad and Chennai. With this fund, we will consolidate our position in the three cities and also expand footprints in new key markets of Mumbai, Pune and National Capital Region (NCR).”

KIAL’s MD and CEO S Sriniwasan said: “As we scale the asset management business, we will work with like-minded partners and create appropriate platforms to address a variety of capital requirements in India.” KIAL focuses on the Alternate Assets business of the group.

While the Kotak Mahindra Group had been associated with PE investments since 1997, the Alternate Assets Group was set up in early 2005 with its first structured third-party private equity and real estate funds. Since then, KIAL has raised USD 3.5 billion across different asset classes.