Kotak Investment Advisors Ltd. backed by Asia’s richest banker Uday Kotak, is looking to raise about $1 billion for a new fund dedicated to investing in India’s residential real estate, according to a person familiar with the matter.
Abu Dhabi Investment Authority could chip about $500 million into the property fund, while Allianz SE could invest about $220 million, said the person, who asked not to be identified as the information is private. Kotak Investment is also in advanced talks with other investors for the fundraising, the person added.
Kotak Investment plans to complete the fundraising by the end of this year and to embark on its investment in 2023, focusing on residential property in India’s top five cities, the the person said. Deliberations are ongoing and details including size and investor lineup could still change, the person added. Representatives for ADIA, Allianz and Kotak Investment declined to comment.
India, like many nations around the world, experienced a pandemic property boom as decade-low interest rates propelled people to buy homes and resulted in a strong rebound in house sale volumes. But the market has recently started to show signs of softening in response to nation’s central bank tightening monetary policy to tame inflation.
The Reserve Bank of India raised the key interest rate by half a percentage point to 5.9% last month — its fourth consecutive hike, taking its cumulative tightening since May to 190 basis points. House sale volumes in the largest nine cities declined 7% in the second quarter compared with the previous three months, according to online real estate analytics platform PropEquity. On an annual basis, volumes are still up 96%.
Founded in 2005 as part of Kotak Mahindra Group, Kotak Investment has raised or managed about $6.3 billion across various funds and platforms, according to its website. It set up a $590 million platform with ADIA in June that focuses on property investment. Kotak Investment has raised, managed or advised more than $2.8 billion under its real estate fund series.
Uday Kotak founded Mumbai-based Kotak Mahindra Bank, which provides commercial and investment banking, as well as insurance and brokerage services. Kotak has a net worth of about $13.9 billion as the country’s ninth-richest person, according to the Bloomberg Billionaires Index.