Kotak lines up realty fund

The Kotak group is launching a real estate fund with an estimated corpus of over $100 million. This is the third domestic realty fund to be launched after HDFC and ICICI Ventures.

The fund will be promoted by Kotak Mahindra Investments Ltd, which is to be headed by S Sriniwasan, who was the executive director in charge of investment banking in the group.

Sources familiar with the development said that the fund has already initiated discussions with leading financial institutions, non-resident Indians (NRIs) and overseas institutional investors including hedge funds.

These funds typically have a lock-in period because investments in real estate are not very liquid.

"Lock-in periods are for two to three years after which the funds offer an exit option," said a senior executive with a real estate fund.

With 100 per cent foreign direct investment in real estate now allowed, financial services companies are rushing to tap this market, which had hitherto remained in the hands of a few large property developers and the unorganised segment.