Alternate assets player Kotak Investment Advisors, a subsidiary of Kotak Mahindra Bank, is set to launch an infrastructure fund.
C Jayaram, executive director of Kotak Mahindra Bank, said the fund will invest in core infrastructure verticals such as roads, ports, airports and power.
The move will mark Kotak’s entry into a third alternate asset. It currently manages two private equity funds that split $225 million between them and 3 real estate funds with total assets under management of $700 million.
“It doesn’t make sense to have an infrastructure fund that is anything less than $1 billion,” said Jayaram, hinting at the magnitude of the fund. Going by this, Kotak will have around $2 billion under management in alternate assets once the infrastructure fund is launched.
Jayaram refused to divulge the name of the person hired to independently head the infrastructure fund. “These days, till I see the person physically sitting in front of me, there are no guarantees,” he quipped.
He expects the entire fund management team in place by March, though. “We will start raising capital only after that,” said Jayaraman.
Kotak is open to partnering with international institutions for the fund, he added. He described the company’s foray into infrastructure as “opportunistic.”
Why not? The Eleventh Five Year Plan envisages an investment of $494 billion in infrastructure to sustain a 9% GDP growth rate.
Ernst & Young estimates over $100 billion of this to come from private investments, according to a report released in November.
Several infrastructure funds have raised or are in the process of raising capital for India, with the cumulative bill around $20 billion. These include offerings from an IDFC-Citigroup-Blackstone consortium, Macquarie Bank, JP Morgan, IDFC Private Equity, ICICI Venture and 3i, besides Kotak.
Meanwhile, Anil Ahuja, partner, managing director and co-head of Asia for 3i also described his company’s infrastructure foray as opportunistic and incidental. “We were only in growth capital when we first came to India in 2005. But doing those deals, we realised three of the first seven were in infrastructure,” he said at a conference on Thursday.
That led to the raising of the 3i India Infrastructure Fund. While $500 million has already been raised and the fund has made three investments, another $500 million is in the process of being raised.
“If you get double-digit returns in infrastructure investing, that’s considered abnormal overseas. So when we raise an infrastructure fund for India, and give our investors returns of 20% and thereabouts, that’s extraordinary,” said Ahuja.
Source: Sify