2024-11-07 06:00:09 :
MUMBAI: Kotak Mahindra’s private equity firm is seeking help from domestic institutional investors (DIIs) for the first time since launching its alternative investment arm two decades ago, a senior company official said.
The company, which has so far only raised money from global investors, is again looking at raising a life sciences fund, this time from local investors.
“We are looking for domestic investors for our new fund. We have sought approval from Sebi for the same and will launch it soon,” said Srini Sriniwasan, managing director of Kotak Alternate Asset Managers Ltd.
To be sure, the company has raised local performance credit funds in the past. However, this is the first equity fund they have raised domestically.
Most large domestic institutional investors, such as insurance companies and pension funds, have not even exhausted the maximum allowable regulatory limits, he said. Based on 2023 data, the maximum allowable allocation for such institutions is $7 trillion, of which only $Investment 3.2 trillion. “Slowly, they (DIIs) are starting to embrace the idea of investing in alternative investment funds and private equity/venture capital funds. Our own capital should be used to build world-class companies in India,” Srinivasan said.
Kotak Mahindra Group, which manages more than $18 billion in assets across private equity, real estate, private credit, strategic landscape, data center and infrastructure, last year reintegrated its alternative investment business under one umbrella.
For a company that has been in the alternative investments business for 20 years, this is significant. While this is a sign of a mature ecosystem, it also shows how franchisees now view domestic capital pools as a stable source of funding.
“We have high confidence that two things are likely to happen. First, we have made moves in the life sciences space. In addition to investing in larger companies through various other funds, we are also strategizing on the balance sheet portfolio of early-stage life sciences innovative companies,” said Srinivasan.
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The firm already has a portfolio of 19 early-stage companies and has invested approx. $It invested Rs 150 crore in these companies from its own balance sheet. “Against this backdrop, some of these companies have raised additional funding from Khosla Ventures, Accel Partners, Morgan Stanley and others,” he added.
This will be Kotak Group’s re-entry into the life sciences space, having previously raised $107 million in dedicated funding in 2008 and 2016.
Sriniwasan said Kotak’s private equity firm is probably the largest healthcare investor in the country, having invested approx. $In the last 12 months alone, various funds in the sector raised Rs 3,000 crore.
Kotak Alternate Assets has raised $9.7 billion to date, including $1.6 billion in Strategic Situation Fund II, which is currently 40% deployed. To date, Kotak Alternate Assets has returned more than $3.5 billion in capital across its various funds. “We have returned almost the entire $1 billion in Strategic Situation Fund I. With a DPI of 97%, we still have a significant portion of the portfolio that will be monetized in the future. This will easily generate an internal rate of return of about 20% in Rs. calculations),” Sriniwasan added.
Sriniwasan said the company is also considering launching an infrastructure/real estate fund that would invest purely in income-generating assets. “We are debating whether it should be infrastructure or real estate. That is something we will decide in the next 12 to 18 months,” he said.
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