Buoyed by the investment appetite of sovereign wealth funds, Kotak Realty Fund (KRF) is planning to deploy about ₹2,300 crore from two new funds in residential, commercial and retail projects across the country.

This comes on the back of KRF, which is a part of Kotak Investment Advisors (a subsidiary of Kotak Mahindra Bank), fully exiting all investments (about $250 million) in its ‘Managed Account Fund I’ in which two sovereign wealth funds had invested in 2013. This fund generated a 19 per cent internal rate of return.

Vikas Chimakurthy, CEO, Kotak Realty Fund, said the two new funds had already tied up monies aggregating ₹2,300 crore and deployments have been happening from the same in the last one year.

“So, from the new capital we have invested in buying out two NPAs (non-performing assets) — a commercial asset in Mumbai (from a co-operative bank) and a mall in Chennai (from a public sector bank), from banks. We have raised eight funds till date (aggregating ₹6,000 crore),” said Chimakurthy.

Referring to the ‘Managed Account Fund I’, KRF CEO elaborated that of the total investor commitment of $356 million, the fund actually invested close to $250 million.

“We did not draw down the balance (about $106 million) because we thought that the market two-three years back itself was in a bubble state. So, we gave the capital back even though there was loss of fees for us. There was so much liquidity which was chasing investments. “The capital was given by two large sovereign wealth funds. They appreciated our fiduciary capabilities and have given us more capital to deploy now in the market.

“We got out when everybody was going berserk in deploying capital. Now we will benefit from lack of liquidity in the market because we are sitting on liquidity now,” explained Chimakurthy.

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