28 February 2019: 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 Bank.
The fund will target both pre-stress and distressed opportunities and also financially support to businesses to prevent them from entering insolvency, Kotak said in a press release.
“This is our first distressed fund. We believe that 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 Srini Sriniwasan, CEO, KIA.
As CEO of KIA, 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 have a separate CEO. The distressed fund called Kotak Special Situations Fund will be headed by Eshwar Karra, former CEO of the Kotak owned Phoenix ARC who was moved to KIA last month.
ADIA’s investment is another indication of large funds looking to invest into the vibrant distressed debt market in India. It also comes ahead of the two day Organisation of Islamic Co-operation (OIC) meeting in UAE in which India’s external affairs minister Sushma Swaraj has been invited as a guest of honour.
Sriniwasan said that large global funds and institutions with money to invest may also join this special situations fund. “With ADAI’s commitment we are officially up and running. There are also others who have expressed interest. Foreign investors recognise this opportunity in India,” he said.
ADIA also has 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 non-performing loans 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 Aldhaheri, executive director of the private equities department at the ADIA.