Kotak Mutual Fund Plans to Raise Rs.2,000 Crore via First Private Credit AIF
The Kotak Mutual Fund will raise up to Rs.2,000 crore from its first private credit alternate investment fund (AIF), which is likely to be launched in the next quarter. Out of the total corpus of Rs.2,000 crore, one-fifth will be the company’s contribution, a senior official said.
The asset manager hopes to collect between Rs.1,500 crore and Rs.2,000 crore from investors for this product. The private credit market has gained considerable momentum among asset management companies in recent times. The firm has seen some of its competitors, such as Aditya Birla Sun Life Mutual Fund and Nippon India Mutual Fund, come up with similar products.
Investors in the AIF would expect excess returns over and above traditional debt mutual funds of 3-4% points, similar to typical private credit fund targets of 15-16% internal rate of return.
The fund would be looking to pursue lending opportunities in situations where private equity investors are being looked to by promoters to acquire a controlling stake, an exit sought by private equity funds, or family members consolidating ownership stakes.
It also reflects the private credit space gaining greater attractiveness as asset managers seek to diversify offerings and address investor demand for more premium returns in niche areas of investment.
