Kotak Investment, ADIA set up $590 million platform for Indian office assets

Alternate assets investment major Kotak Investment Advisors has formed an alliance with a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA) to set up a $590 million or nearly Rs 4,600-crore real estate investment platform.

The fund, which will be domiciled in Gujarat’s GIFT City, will be investing in office assets across India focusing on the top six property markets of Mumbai, Bangalore, Delhi-NCR, Pune, Hyderabad and Chennai.

With this, Kotak Investment Advisors has achieved closure of its 12th real estate fund and has raised, managed or advised more than $2.8 billion under its real estate fund series.

“This is our 12th real estate Fund and extends our successful relationship with ADIA. With the closure of this fund, we have raised around $1 billion in real estate in the last one year. Strong demand for offshoring, return to office increasing, growth of the services industry and Indian economy has seen substantial scope for creating a portfolio of quality office assets,” said Vikas Chimakurthy, CEO, Kotak Realty Fund.

According to him, with multiple avenues for exit of such portfolios and increasing liquidity of completed assets, the fund intends to curate this portfolio to cater to increasing appetite for stabilised assets. The fund is looking at deploying money in income producing assets, forward purchases, build-to-core properties through formats including equity and structured equity.

“Kotak Alternate Assets is targeting to become the "go-to" Alternative Assets manager for differentiated strategies for global investors. This pool of equity capital expands our footprint in real estate Investments with a focused strategy…This is the first of many pools of capital that we intend to raise this year to address various Alternative Investment opportunities in India,” said Srini Sriniwasan, Managing Director, Kotak Investment Advisors.

He is of the view that the GIFT City regime and proactive regulator has made the process of pooling global capital in GIFT City flexible and smooth.

This is ADIA’s fourth relationship with Kotak Investment Advisors for Indian real estate assets taking its total investment to $1.15 billion. Separately, the UAE-based sovereign wealth fund has also committed $500 million earlier to a distressed fund backed by the largest home-grown alternative assets investment major in India.

“This new platform will focus on opportunities associated with long-term demand for Indian office space, which is being driven by global organisations seeking to capitalise on the country’s skilled workforce. It also presents the opportunity to extend our relationship with Kotak, with whom we have successfully invested over a number of years,” said Mohamed AlQubaisi, Executive Director of the Real Estate Department at ADIA.

Set up in 2005, Kotak Investment Advisors has raised, managed and advised in aggregate over $5.7 billion across different asset classes including real estate funds, private equity funds, infrastructure funds, special situations fund, listed strategies and investment advisory, all led by independent investment teams.

Against the backdrop of an ongoing policy overhaul, rising investor confidence, enhanced transparency, and sustained growth in demand for grade A commercial office space, experts believe the investment momentum in the Indian real estate sector will continue to rise.

ADIA’s investment indicates the appetite for Indian real estate assets among global institutional investors continues to be strong. In addition to large and established domestic investors, global funds like Blackstone Group, Brookfield Asset Management, GIC, Xander, Ascendas, CPPIB, Warburg Pincus and Goldman Sachs are expanding their investments in the sector.