Kotak plans to enter venture capital, debt, buyout space

Mumbai: Kotak Investment Advisors Ltd (KIAL), the alternative asset arm of Kotak Mahindra Group, plans to expand into venture capital, venture debt and buyouts, a senior executive said.

“Right now we are not in the venture capital, venture debt and buyout space. These are interesting spaces where Kotak would like to be present and build a full range of products… In venture capital, buyouts and risk debt, India does not have many domestic big players and we would like to be in those companies,” said Srini Sriniwasan , director of KIAL in an interview.

While India has a number of domestic and several global incumbents such as Kalaari Capital, Everstone Capital, Blackstone, Carlyle Group, KKR & Co, Warburg Pincus and Advent International, venture capital investment in the country has grown over the years. past five years. It has become a popular tool for startup founders to raise capital without diluting equity. InnoVen Capital, Trifecta Capital, Alteria Capital and Stride Ventures are the leading venture capital investors and they have actively attracted debt funds.

Buyouts are usually when a buyer acquires more than 50% of a company resulting in a change of control and ownership.

KIAL has yet to crystallize its plans for the foray into buyouts and venture debt activities. In addition, Kotak’s investment arm also plans to raise another infrastructure fund, an angel fund and a “specialized” 12th real estate fund focusing on logistics and commercial office space, Sriniwasan said without disclosing fund size details.

KIAL has already earned 14 startup investments 70 crore through its own fund mobilized in the healthcare and health tech sectors. “For such investments, we have applied for an angel fund with a size of 150 crores. We will be launching it soon,” said Sriniwasan, who believes that although it is a late entrant, there is still room for growth.

In terms of venture capital, the alternative investor will focus on healthcare and health tech companies.

“It’s already a $10 billion industry in India. We have to do things that have an impact as an investor and capital has to go into it. I’m not a big fan of replicating American models here. But the innate competencies that India has are unique,” Sriniwasan added.

Amid the ongoing funding scarcity for startups following runaway success in 2021, Sriniwasan said there is enough entrepreneurship going on for the venture capital space to mature.

According to him, momentum investment will always be a challenge. “The market works on sentiment and liquidity. At the moment both are negative. Therefore, an investor should choose the investment portfolio. As of now, Kotak has such specifically chosen investments such as Pine Labs and Mobile Premier League (MPL), which are likely to grow in size,” the veteran investor further said.

The Kotak Group’s billionaire Uday Kotak controlled alternative investment firm was founded in 2005 and is one of the largest homegrown private investment firms in the country with total assets under management of $5.7 billion. The total existing investments are spread across various asset classes, including private equity funds, real estate funds, infrastructure funds, special situations fund, listed strategies and investment advice.

KSSF counts the Abu Dhabi Investment Authority sovereign wealth fund, Singaporean sovereign wealth fund GIC, entrepreneur Azim Premji-owned Premji Invest and parent company Kotak Mahindra Bank among its investors.

KIAL is in the process of raising its second strategic situations fund with a corpus of $650 million – $1 billion by October. In May, it had announced plans to launch a 1,000 crore private credit fund.

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