Tuesday saw the first closure of the Kotak Infrastructure Investment Fund announced by India’s Kotak Investment Advisors, with pledges totalling INR 5,328 crore ($645.4 million) from the Asian Infrastructure Investment Bank and Canada Pension Plan Investment Board.
Kotak Investment indicated that KIIF aims to have a fund size of INR 6,000 crore ($726.8 million) and will engage in operating infrastructure projects by offering senior, secured credit.
Kotak Investment, an alternative asset management division of the Kotak Mahindra banking group controlled by Indian billionaire Uday Kotak, also noted that the new vehicle represents the first time an infrastructure credit-focused fund has been established with sizeable commitments from international investors.
“KIIF is a differentiated offering in an otherwise crowded infrastructure investing market dominated by equity investors,” said Kotak infrastructure funds CEO Suman Saha. “It attempts to measure and price risk better than equity, and will deliver superior risk-adjusted returns to its LPs.”
With the financial support of the China-backed AIIB, a development bank founded in 2016 with 105 members worldwide and $100 billion in capital, and the Toronto-based CPPIB, which has assets under management of C$529 billion ($390.3 billion), KIIF will offer credit solutions and capital for growth to stressed infrastructure assets.
According to a November article in India’s Construction World magazine that used the pension fund manager’s second-quarter financial figures, CPPIB contributed $229 million to KIIF as an anchor investor.
Infrastructure, according to managing director of Kotak Investment Srini Sriniwasan, is the key to the Indian government’s aim to make the nation a $5 trillion economy by 2025.
“This fund will play a key role in solving the balance sheet correction issues in infrastructure assets at a time when other sources of capital have dried up,” Sriniwasan said.
After securing an anchor investment of $500 million from a division of the Abu Dhabi Investment Authority for the asset manager’s 13th real estate fund, a $1 billion platform focusing on opportunistic property investments in India, a deal that was disclosed last month, Kotak reached its most recent milestone.
In April, the largest conglomerate in India, Tata Group, and CPPIB announced a joint venture in the country’s office sector worth INR 53 billion ($696 million). After announcing an INR 26.5 billion joint venture with RMZ Corp in March, after a similar partnership in April 2021, the news represented CPPIB’s second office joint venture in the nation in 2022.
Ahead of the $1.1 billion final closure of Singaporean giant Keppel Corp’s second data centre fund, which is geared toward investments in Asia and Europe, AIIB earlier this year provided $150 million to the area.
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