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Friday, November 18, 2022

ADIA Commits $500M to Kotak India Fund

Uday Kotak looks pleased to have raised half a billion dollars from his Abu Dhabi friends (Getty Images)

Kotak Investment Advisors has secured an anchor investment of $500 million from a subsidiary of the Abu Dhabi Investment Authority (ADIA) for the Mumbai-based asset manager’s 13th real estate fund, a $1 billion platform targeting opportunistic property investments in India.

With the first closing of the latest vehicle in the Kotak Realty Fund series, Kotak Investment has raised $1.5 billion for real estate across multiple strategies in the last year and a half, the firm said Tuesday in a release.

“This is an opportunistic fund which can invest across various real estate asset classes and capital stack, i.e. both debt and equity,” said Vikas Chimakurthy, CEO of Kotak Realty Fund.

The announcement confirms an October report by Bloomberg , which quoted sources saying that German financial giant Allianz might also invest $220 million in the new fund alongside ADIA’s half-billion-dollar commitment.

Flourishing Partnership

Mohamed AlQubaisi, executive director of the real estate department at ADIA, said the agreement extends the sovereign wealth fund’s existing and long-standing relationship with Kotak Investment, a unit of the Kotak Mahindra banking group controlled by Indian billionaire Uday Kotak.

ADIA’s Mohamed AlQubaisi

The Economic Times reported in June that Kotak Investment and ADIA had joined forces to set up a $590 million platform to invest in office assets in Mumbai, Bangalore, Delhi-NCR, Pune, Hyderabad and Chennai as part of the Indian firm’s 12th real estate fund.

“The new platform is primarily targeted at the significant demand for housing in India, which is driven by sustained economic growth and a shortage of urban housing clusters,” AlQubaisi said.

Kotak Investment has now raised, managed or advised more than $3.3 billion under its real estate fund series, according to Tuesday’s announcement.

“Kotak’s real estate investment practice has been a consistent performer over 17 years across cycles and strategies,” said Srini Sriniwasan, managing director of Kotak Investment. “This track record has enabled us to emerge as a leading home-grown alternate asset manager with a significant global LP base who have reposed faith multiple times with Kotak with significant re-up participation in successor funds.”

Sovereign Power

With an estimated $790 billion in assets under management, ADIA is the third-largest sovereign fund in the world in rankings compiled by SWFI , trailing comparable funds controlled by China and Norway.

The Abu Dhabi-based fund’s India investments in the past year include the acquisition of a $20 million stake in Indiabulls Housing Finance , with private equity giant Blackstone also picking up an interest in the Gurugram-based mortgage lender for $36 million.

In April, ADIA acquired a 10 percent stake in HDFC Capital Advisors , the private equity arm of Mumbai-based mortgage lender HDFC Ltd, for INR 184 crore (now $22.6 million).

India outperformed regional peers in terms of real estate investment activity in the third quarter of this year. The world’s second most populous country was one of only two major Asian markets (the other being Singapore) where deal volume grew in the period, soaring 79 percent year-on-year to $900 million, according to the latest Capital Trends report by MSCI Real Assets.

Michael Maren
Michael Maren
Former marine biologist who likes to spend as much time in the tropics as possible, due to a horrible time I once had in Alaska. Brrrr.

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