Kotak Investment Advisors Ltd (KIAL) has announced the launch of Kotak India Alternate Allocation Fund, a Fund of Funds (FoF), to invest in other Private Equity (PE), Venture Capital (VC) funds coupled with direct investments into companies.

The fund targets to raise ₹1,500 crore, including a green-shoe option of ₹750 crore. The fund’s objective is to diversify across PE/VC funds in multiple sectors, including consumer, technology, healthcare, financials, etc, as well as across multiple stages, from early stage to growth stage and late stage across different vintages.

‘Vintage’ refers to the first year the fund starts investing in companies. The fund also intends to invest some portion into co-investment opportunities available from such investee funds.

Access to multiple funds

Nidhi Chawla, Fund Manager, Kotak India Alternate Allocation Fund, said, “Investors require an optimal alternate equity portfolio through diversification, right fund manager access and professional selection. Through Kotak’s FoF, we intend to provide investors access to multiple funds as well as leverage our institutional diligence with peer benchmarking data available, coupled with institutional monitoring of long-tenure funds.”

“The performance difference between best and worst fund managers in PE/VC funds can be as high as 15- 20 per cent IRR, so manager selection is critical,” added Chawla.

Srini Sriniwasan, Managing Director, KIAL, said, “Indian alternate ecosystem has become vibrant with PE/VC fund managers delivering consistent returns and outperformance over public benchmarks. But many of the marquee fund managers have been inaccessible to domestic investors as they raised only offshore capital or had high minimum ticket investment requirements. With Kotak’s FoF, we intend to enable access to such funds and increase domestic overall participation in the Indian alternates industry”.

Kotak India Alternate Allocation Fund is set up as an Alternative Investment Fund under SEBI regulations, managed by KIAL, the alternate asset management arm of the Kotak Mahindra Group.

KIAL has, till date, raised/managed/advised in aggregate over $5.7 billion across different asset-classes including private equity funds, real estate funds, infrastructure funds, special situations fund, listed strategies and investment advisory, all led by independent investment teams.