Kotak Realty Funds plots second offshore India fund

In the same month as the real estate unit of Mumbai-based Kotak Investment Advisors closed on a high yielding debt fund for domestic investors, PERE has learned it is already planning to raise in the region of $350m for its next India-focused offshore vehicle.

Kotak Realty Fund, the real estate investment management business of Mumbai-based Kotak Investment Advisors, is plotting the launch of a second offshore India fund for the first quarter of 2012.

PERE understands the firm expects to raise in the region of $350 million for the fund, a follow-up effort to its $268.1 million Kotak India Realty Fund, which is thought to be almost fully committed.

Only this week, the firm was reported to have committed some of the last capital of the first fund in a township project in Gurgaon called Astaire Gardens from a developer called BPTP, which was backed by Citi Property Investors, now owned by Apollo Global Real Estate. According to The Economic Times of India, Kotak is acquiring more than a 50 percent stake in a 70-acre plot within the project.

The original fund was raised to invest in the equity, equity-related and debt securities in real estate and real estate-related investments and companies across India.

The marketing documents for the second fund are not yet thought to have been circulated although Kotak would not comment on its fundraising plans when contacted.

While it has almost finished investing its first offshore fund, Kotak, which has approximately $850 million of assets under management overall according to its website, has recently raised capital from its pool of domestic investors for a separate fund.

The firm announced earlier this month it had raised approximately $100 million from high net worth families and other domestic investors for its Yield Funds vehicle. Structured as a four-year fund, it is expected to generate IRRs in the high 20s via senior secured debt investments.

Residential projects in need of finance injections are expected to be a focal point of the vehicle “given the demand potential” said Vikas Chimakurthy, one of Kotak’s directors in an announcement about the vehicle.

“The financing constraints facing the real estate sector will help provide the funds with attractive investment opportunities and we expect deal flow activity to remain robust.” Indeed, the firm is expected to invest the entire fund over the next 12 months.