Kotak Closes on $645M From CPPIB, AIIB for India Infrastructure Fund

India’s Kotak Investment Advisors on Tuesday announced the first closing of its Kotak Infrastructure Investment Fund with INR 5,328 crore ($645.4 million) in combined commitments from the Canada Pension Plan Investment Board and the Asian Infrastructure Investment Bank.

KIIF targets a fund size of INR 6,000 crore ($726.8 million) and will invest in operating infrastructure projects by providing senior, secured credit, Kotak Investment said in a release.

The new vehicle marks the first time an infrastructure credit-focused fund has been set up with significant commitments from international investors, according to Mumbai-based Kotak Investment, an alternative asset management unit of the Kotak Mahindra banking group controlled by Indian billionaire Uday Kotak.

“KIIF is a differentiated offering in an otherwise crowded infrastructure investing market dominated by equity investors,” said Kotak infrastructure funds CEO Suman Saha. “It attempts to measure and price risk better than equity, and will deliver superior risk-adjusted returns to its LPs.”

Hefty Backing

KIIF will provide credit solutions and capital for growth to stressed infrastructure assets, boosted by the financial muscle of Toronto-based CPPIB, which has assets under management of C$529 billion ($390.3 billion), and the China-backed AIIB, a development bank founded in 2016 and boasting 105 members worldwide and $100 billion in capital.

CPPIB committed $229 million to KIIF as an anchor investor, India’s Construction World magazine reported in November, citing the pension fund manager’s second-quarter financial results.

Kotak Investment managing director Srini Sriniwasan said infrastructure is the key to the Indian government’s plan to make the country a $5 trillion economy by 2025.

“This fund will play a key role in solving the balance sheet correction issues in infrastructure assets at a time when other sources of capital have dried up,” Sriniwasan said.

Ready to Splash Out

Kotak’s latest milestone comes after the firm secured an anchor investment of $500 million from a subsidiary of the Abu Dhabi Investment Authority for the asset manager’s 13th real estate fund, a $1 billion platform targeting opportunistic property investments in India, in a deal disclosed last month.

In India’s office market, CPPIB in April announced an INR 53 billion ($696 million) joint venture with the property development arm of Tata Group, the country’s largest conglomerate. The news marked CPPIB’s second office joint venture in the country in 2022 after it unveiled an INR 26.5 billion venture with RMZ Corp in March following a similar cooperation in April 2021.

Elsewhere in the region, AIIB earlier this year contributed $150 million to the $1.1 billion final closing of Singaporean conglomerate Keppel Corp’s second data centre fund targeting investments in Asia and Europe.