Abu Dhabi Investment Authority commits $500 million for Kotak's AIF

The fund will target both pre-stress as well as distressed opportunities

Kotak Investment Advisors (KIAL) on Thursday announced the launch of the Kotak Special Situations Fund, anchored by a $500-million commitment from a wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA). Kotak has committed $100 million.

“A few more investors have shown interest in the fund and we are in the discussion stage now,” Srini Sriniwasan, Managing Director and CEO, Kotak Investment Advisors told Business Standard. The fund will target both pre-stress and distressed opportunities, with a key focus on providing financial support to pre-stress businesses to prevent them from entering insolvency. Sriniwasan said it will be a sector-agnostic fund as the stress is spread across various sectors.

While the sweet spot would be Rs 350-500 crore, Sriniwasan said size is not the criteria, but the right kind of operating partner and returns are.  The fund’s objectives align with the stated commitment from the Indian government to reduce non-performing assets in the economy.

The Kotak Special Situations Fund is structured as an Alternative Invest-ment Fund under Sebi regulations. It will be managed by the Alternate Asset Management AMC — KIAL and will be led by Eshwar Karra, former CEO of Phoenix ARC, who has significant experience in the stressed asset space.

Hamad Shahwan Aldhaheri, Executive Director of the private equities Department at the ADIA said: “Institutional investors can play an important role in building a successful secondary market for non-performing loans in India. With a broad mandate to invest across asset types and sectors, our new partnership with Kotak will contribute to this process and help to ease the burden of NPLs on the Indian financial system.”

Eshwar Karra, CEO of Kotak Special Situations Fund said: “We have a robust pipeline of transactions coming through the IBC process, and others from outside the process as structured financing for settlements. We believe there is a significant opportunity to provide bespoke financing in a range of situations.”