Kotak Investment Advisors eyes stuck projects in real estate

Kotak Realty Fund has raised $1.8 billion so far and has dry powder of around $500 million,

Kotak Investment Advisors, Kotak Mahindra Group, Distressed projects, Real estate sector, Realty fund, Kotak Realty Fund, Kotak India Real Estate Fund VIII, Non-convertible debentures, OMR Developers, The Marina Mall, Chennai, Tamil Nadu, Mumbai

Kotak Investment Advisors, the alternate investment business of Kotak Mahindra Group, is eyeing distressed projects in the real estate sector and looking to acquire such projects across the country through its realty fund.

Kotak Realty Fund has raised $1.8 billion so far and has dry powder of around $500 million, or Rs 3,500 crore. As part of its strategy, in the first two stuck projects, the fund infused capital, provided an exit to existing financiers, got the project completed and stabilised. Its real estate funds are currently looking at four to five such stuck projects that can be revived and completed soon.

In one of the first such exposures, Kotak India Real Estate Fund VIII invested Rs 244 crore in non-convertible debentures issued by OMR Developers in September 2017. The developer was constructing a retail mall project --The Marina Mall -- on Chennai’s OMR Road in Tamil Nadu. Kotak provided an exit to the existing lenders of the project and infused additional funds to complete the project.

The mall launched operations in April 2019 and by September nearly 90% of the mall area had started trading. The second stuck project in which Kotak Investment Advisors had invested was 1Aerocity near domestic airport in Mumbai, Maharashtra. It pumped in Rs 100 crore in 1Aerocity in September 2017 and achieved 23 percent internal rate of return.

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