The Hindu Business Line : Kotak Mahindra plans foray into equity business

FINANCIAL services provider Kotak Mahindra plans to enter private equity business in a big way, courtesy an Rs 200-crore fund that it hopes to promote shortly.

The proposed entry will enable the group to take advantage of what Mr Uday Kotak, chief promoter, describes as a "flurry of new entrepreneurial opportunities" that currently marks Indian businesses.

Private equity is being seen as a means of tapping such opportunities, which are expected to come up in a diverse range of segments. Kotak Mahindra, which already dabbles in venture capital in a limited manner, plans to spot businesses that require capital at early stages of their development.

Mr Kotak supported the case for private equity with the example of Divi's Lab, a company that had come up with an IPO not very long ago. "We had identified it at a critical juncture ... the Divi's stock has now advanced significantly," he said, adding that the idea is to focus on similar cases.

He, incidentally, observed that Goldman Sachs, the group's overseas partner, is also engaged in private equity investments a major way. As for investment banking, Kotak Mahindra will continue to search for opportunities in the PSU disinvestments process. Its recent mandates included those from Maruti Udyog, Indraprastha Gas and TV Today; it has also been mandated for Patni Computer's forthcoming IPO.

"Investment banking is expected to provide us good business in future. It seems the IPO market will soon gather steam, with lots of issues devised by promoters who wish to take their companies public," Mr Kotak told Business Line.

On another front, the company is likely to work out distribution tie-ups with general insurance outfits. However, it has ruled out the possibility of entering the non-life insurance business on its own, the fact that it has an active life insurance joint venture with Old Mutual notwithstanding.