Kotak Bank to double network

Kotak Mahindra Bank plans to open about 50-60 branches to more than double its network in two years. To tap emerging opportunities, the bank is planning to launch a real estate venture fund with a corpus of Rs 450-500 crore in few weeks.

The bank is also nearing the second closing of its private equity fund with about Rs 500 crore. The fund recently invested in life science and real estate businesses.

In the first closing, the fund had managed Rs 350 crore. The average ticket size of an investment by the fund is expected to be about Rs 25 crore.

"In two years, we would be bigger than any foreign bank in India," said Uday Kotak, vice-chairman and managing director.

The bank, with 87 per cent retail portfolio including commercial vehicle advances, plans to leverage its strength in investment services to grow its customer base. Corporate sector advances, which account for 13 per cent of the portfolio, grew to Rs 900 crore from Rs 360 crore at the end of March 2004.

On the real estate fund, Kotak said, "Apart from foreign and NRI investors we are aiming to get in significant domestic participation ."

Lease yields of about 8-10 per cent per annum in commercial real estate offers attractive returns besides opportunities through picking equity in retail ventures.

In insurance, while Kotak does not plan to enter general insurance, it is hoping that its life insurance business would break even by 2008.

"We expect the life insurance business to break even in the seventh year of operation. This is the fifth year of our life insurance business," Kotak said.

The bank has also ventured into buying distressed assets. In 2004-05, it bought distressed assets having outstanding dues of Rs 1000 crore.

"We paid for the portfolio in cash and are confident of making good profit on the portfolio in 18 to 24 months," Kotak said, adding that normally 20-50 per cent of the full values of the dues can be recovered.