Kotak unveils maiden private equity fund

The Kotak Mahindra group today launched the India Growth Fund, a private equity fund, in partnership with US-based SEAF Management LLC. The fund has received an initial commitment of Rs 180 crore and the corpus is proposed to be scaled up to Rs 400-450 crore by the end of the current fiscal year.

"We are looking at investments of $3-5 million each in small and medium sized companies, which are essentially mid-stage emerging companies with positive EBITA," said Nitin Deshmukh, head of private equity at Kotak Mahindra.

Apart from Kotak Mahindra, which is chipping in with Rs 25 crore, and SEAF Management (Rs 15 crore), Small Industries Development Bank of India (Rs 25 crore), Life Insurance Corporation and USAID would be the other contributors to the fund.

Deshmukh said investments are proposed in life sciences, media and entertainment, specialised retailing, light engineering, information technology, healthcare and logistics and distribution sectors.

Talks are underway with some international and domestic investors, including domestic corporates, for increasing the corpus.

Deshmukh said the initial deals with companies are expected to materialise by the end of the year. "We are in talks with some emerging companies and are looking at around 20 deals through the fund," he said.

While the Kotak Mahindra group has been active in the private equity market for a long time, the India Growth Fund is the first time that it has launched a private equity fund.

Uday Kotak, vice-chairman and managing director Kotak Mahindra Bank said, "India is one of the biggest growth stories in the world. This is reflected in the fact that it is now among the top three destinations for foreign direct investment behind China and the US. India Growth Fund is the right product at the right time in the right market. The inclusion of private equity in the group's portfolio is a definite move towards our aim to provide holistic financial solutions."