Kotak Investment Advisors seeking to raise $1 billion for real estate fund

19 Oct 2022 , 10:17 AM

Kotak Investment Advisors Ltd is seeking to raise around $1 billion for a new fund devoted to investing in residential real estate in India.

According to the report, Allianz SE could spend about $220 million and Abu Dhabi Investment Authority could contribute roughly $500 million to the property fund. For the financing, Kotak Investment is also in advanced discussions with additional investors, the report continued.

According to the report, Kotak Investment intends to wrap up its fundraising by the end of this year and start investing in residential real estate in India's top five cities in 2023.

India, like many other countries, went through a pandemic real estate bubble as a result of the historically low borrowing rates that encouraged people to purchase homes and caused a significant uptick in the number of homes sold. But in reaction to the nation's central bank tightening monetary policy to contain inflation, the market has recently begun to show indications of cooling.

The benchmark interest rate was increased by the Reserve Bank of India last month by half a percentage point to 5.9%. This was the fourth straight increase, bringing the total tightening since May to 190 basis points.

According to online real estate analytics firm PropEquity, the number of homes sold in the largest nine cities fell 7% between the first and second quarters. Volumes continue to increase annually by 96%.

According to its website, Kotak Investment, which was established in 2005 as a division of the Kotak Mahindra Group, has raised or managed around $6.3 billion across a variety of funds and platforms. In June, it established a $590 million platform with ADIA that focused on real estate investing. Under its real estate fund series, Kotak Investment has raised, managed, or provided advice on more than $2.8 billion.

Kotak Mahindra Bank, situated in Mumbai, was established by Uday Kotak and offers services in commercial and investment banking, insurance, and brokerage. According to the Bloomberg Billionaires Index, Kotak is the ninth richest individual in the nation with a net worth of around $13.9 billion.

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