Kotak Realty Fund, owned by India’s fifth largest private sector lender by revenue, raised Rs.523 crore to lend to real estate developers with an assured return.
“It is a high inflationary environment and we are sure to get equity-like returns on debt-like risks,” says Vikas Chimakurthy, Director at Kotak Realty Fund, which manages Rs.3,500 crore. Real estate developers are under stress as lenders have turn stringent.
Kotak has raised money from its existing investors. “Our investors are satisfied with the returns and hence agreed to invest in the debt fund which they preferred more over equity,” Chimakurthy said.
“A better track record supported by a large wealth management portfolio helped Kotak to raise money in a tough market,” says a fund manager, adding, “Debt with an assured return offer anywhere between 20 to 21% returns, better than equity.” Private equity investors invested $784 m in real estate projects between January and September, 2011, 4% lower than in the same period previous year at Rs.4,248 crore, VCCircle, data provider showed.
The primary focus of the fund will be on residential projects, it said in a statement.
“Not many Indian or global PE funds are interested in investing in the Indian real estate sector. Since the competition is less, we find a good opportunity to invest here,” Chimakurthy of Kotak Realty Fund said.
“The financing constraints facing the real estate sector will help provide the funds with attractive investment opportunities and we expect deal flow activity to remain robust,” said Vikas Chimakurthy, director at Kotak Realty Fund.
