Kotak Mahindra Bank Ltd’s international asset management arm now brings $3.5 billion (Rs13,755 crore) from foreign institutional investors for management or advisory.
The bank has been in this business for seven years, but has consolidated its business model in the last 18 months, and launched five funds in 2007 with two to come in 2008.
“It is well-timed because currently some of the western markets, which were looking so good a few years ago, are looking so bad,” said Paul Parambi, head-international business at Kotak Bank. He refers to the US subprime crisis, which broke in August when defaults on housing loans gained mass and had global repercussions. “The investors there are at least looking at how they can invest out.”
Kotak’s funds have investors from the United States, Europe (particularly United Kingdom and Switzerland), West Asia, Africa, Australia, Singapore and Hong Kong. “The challenge is just in reaching out to them,” said Parambi.
Several of the new funds that started in the second half of 2007, including the infrastructure and quasi-private equity funds, have drawn particularly strong interest.
Parambi said they expected the infrastructure fund to raise $100 million but it ended up with $175 at its initial public offering in November and will reach $250 million at the end of this month. The quasi-private equity fund drew in $85 million but is expected to reach $200 million.
The fund will have a life of five years and acquire 2% to 10% in public companies with a market capitalization of $100 to $500 million. The firm will do a private equity-style research process before investing and also make strategic recommendations to the firm.