Kotak Investment Advisors Ltd. is looking to raise about $1 billion for a new fund dedicated to investing in Indian residential real estate.
The Abu Dhabi Investment Authority may seek about $500 million in real estate, while Allianz SE could seek about $220 million, said the person, who asked not to be identified because the information is private. The person added that Kotak Investment is also in talks with other investors to raise money.
Kotak Investment plans to stop fundraising by the end of this year and start investing in 2023, focusing on residential properties in India’s five largest cities. Negotiations are ongoing and details such as the size and composition of investors could still change, the person added. Representatives of ADIA, Allianz, and Kotak Investment declined to comment.
India, like many countries around the world, experienced a real estate pandemic as a decade of low-interest rates encouraged people to buy homes and led to a strong recovery in home sales. However, the market has recently started to show signs of weakening in response to the country’s central bank tightening monetary policy to curb inflation.
India’s central bank raised its benchmark interest rate by half a percentage point last month to 5.9 percent, its fourth consecutive increase, taking the cumulative tightening since May to 190 basis points. Home sales in nine major cities fell 7% in the second quarter compared with the previous three months, according to the online analytics platform PropEquity.
On a year-over-year basis, volumes are still up 96%.
Founded in 2005 as part of the Kotak Mahindra Group, Kotak Investment has raised about $6.3 billion through various funds and platforms, according to its website. In June, he founded ADIA, a $590 million platform focused on real estate investments. Kotak Investment has acquired, managed, or advised over $2.8 billion across its real estate portfolio.
Uday Kotak founded Mumbai-based Kotak Mahindra Bank, which provides commercial and investment banking, insurance, and brokerage services. Kotak’s net worth is around $13.9 billion, making him the ninth richest person in the country, according to the Bloomberg Billionaires Index.