ADIA to invest $500 million in Kotak’s stressed assets fund


Mumbai: UAE-based sovereign wealth fund Abu Dhabi Investment Authority (ADIA), has committed $500 million to a new distressed fund backed by Kotak Investment Advisors (KIA), the alternative investments arm of Kotak Mahindra BankNSE 1.06 %.

The fund will target both prestress and distressed opportunities and also financially support businesses to prevent them from entering insolvency, Kotak said in a press release.

ADIA’s investment comes at a time of geopolitical tension in the subcontinent and reflects the close ties between UAE and India.

It comes ahead of the two-day meeting of the Organisation of Islamic Cooperation (OIC) in Abu Dhabi, where external affairs minister Sushma Swaraj has been invited as a guest of honour.

Experts said ADIA’s investment was another indication of large funds looking to invest in India’s vibrant distressed debt market.

The sovereign wealth fund has also invested $500 million in two other real estate funds managed by KIA.

“Institutional investors can play an important role in building a successful secondary market for nonperforming loans (NPLs) in India.

With a broad mandate to invest across asset types and sectors, our new partnership with Kotak will contribute to this process and help to ease the burden of NPLs on the Indian financial system,” said Hamad Shahwan Al Dhaheri, executive director of the private equities department at the ADIA.

The new distressed fund will be called Kotak Special Situations Fund. “We believe there is a large opportunity for distressed debt in India, especially with the new bankruptcy code in operation. We will also provide high-yield structured credit and specific financing requirements for companies,” said Kotak Investment Advisors CEO Srini Sriniwasan.

Sriniwasan oversees $3.3 billion across different asset classes, including private equity funds, real estate funds, infrastructure funds and listed equities. Each of these funds has a separate CEO. The distressed fund will be headed by Eshwar Karra, former CEO of the Kotak-owned Phoenix ARC, who moved to KIA last month.

Sriniwasan said large global funds and institutions may also join the fund. “With ADIA’s commitment, we are officially up and running.

There are others who have expressed interest. Foreign investors recognise this opportunity in India,” he said.