Kotak Investment Advisors closes $440m fund

Mumbai-based Kotak Investment Advisors, a subsidiary of Kotak Mahindra Bank, has raised $440 million (€279 million) for its third private equity fund, exceeding its target by $140 million.

The fund saw its first and final close within three months of fundraising, the firm said in a statement. It was raised from Kotak Mahindra’s existing client base, and included institutional investors and high net worth individuals. Nitin Deshmukh, the chief executive of Kotak Private Equity Group, told PEO that the fund was raised entirely from domestic investors.

The Kotak India Growth Fund II will be managed by the Kotak Private Equity Group, part of Kotak Investment Advisors, which manages two other funds, the $160 million Kotak India Growth Fund I and the $68 million Kotak India Venture Fund.

In its largest fund to date, the firm will continue with the investment strategy of its previous growth fund and will look to invest $15 million to $40 million per deal in businesses across diverse sectors.

“This is the best time to be sitting on investible cash,” Deshmukh said in a statement. He added that the healthy rate of India’s economic growth is “expected to throw up several opportunities in the mid market space in high growth segments of global manufacturing, domestic consumption and infrastructure led services. The recent capital market dynamics are also expected to help moderate investment valuations.”

The private equity group recently invested $17.5 million in ICOMM Tele, a telecom tower manufacturing company, from Kotak India Growth Fund I. That fund’s other investments include Home Solutions, a chain of home improvement stores; SIRO Clinpharm, a clinical research services company; INX Media, a media entertainment company; and Metahelix, an agricultural biotech company.

Deshmukh told PEO that Kotak India Growth Fund I is fully invested in 15 deals, while about 30 percent of capital from the Kotak India Venture Fund has been deployed in 3 deals thus far.

Kotak Investment Advisors now manages more than $1.4 billion of assets, split almost evenly between private equity and real estate funds. The real estate division of the firm manages about $700 million in three private real estate funds that is overseen by a separate investment team.

It is also set to raise a $1 billion infrastructure fund for India that will be managed by a third investment team which is being set up, Deshmukh said. He said he expects Kotak Investment Advisors’ total assets under management to be about $2.5 billion by March 2009.