Kotak Investment Advisors, a subsidiary of Kotak Mahindra Bank, is launching a $1 billion (€683 million) infrastructure fund to invest in the booming Indian real estate market.
The fund, which will focus on roads, ports, airports and power, will begin raising capital in March, once the fund management team is put in place, according to Kotak Mahindra executive director C Jayaram. The fund will be open to international investors.
Kotak already manages two private equity funds worth a combined $225 million and three real estate funds with total assets under management of $700 million. Once the fund is raised, Kotak Investment Advisors will have about $2 billion under management.
The news comes at a time when many firms are raising large infrastructure funds. In August 3i launched its debut Indian infrastructure fund on $1 billion. Macquarie Bank, JP Morgan, IDFC Private Equity, ICICI Venture, and Blackstone have also raised or are raising Indian infrastructure funds.
The Government of India now estimates that investment in infrastructure will need to increase from 3.5 percent of GDP at present to 8 percent of GDP in 2012. It anticipates around $494 billion in infrastructure investment will be needed over the next five years in order to sustain the current growth rate. Ernst & Young estimates that over $100 billion of this will need to come from private investors.