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The International Finance Corporation (IFC) is planning to make an equity investment of up to $25 million in Kotak India Private Equity's new fund.
According to IFC's disclosure, Kotak III has a target fund size of $300 million, with a hard cap of $400 million.
"Private equity fund raising in India continues to be slow. IFC's support will further catalyse interest in the capital constrained PE funds market in India," said IFC, the World Bank's investment arm.
Kotak III is the successor to two generalist funds and a sector fund. Earlier funds are India Growth Fund I, a $160 million 2005 vintage fund, India Growth Fund II (together with offshore funds), a $300 million 2009 vintage fund and Life Sciences Venture Funds, a $68 million 2007 vintage fund.
Kotak III will invest in equity and equity-linked instruments of companies that have significant operations in India. While it is sector agnostic in general but it proposes investments primarily in pharmaceuticals, life sciences & healthcare which is expected to constitute upto 60% of the portfolio investments. This will be followed by selective investments in financial services, consumer products, and technology companies.
It plans to invest in mid-market companies, which could lead to job creation at a greater rate than the national average.