Kotak AMC targets extra ₹800 cr for new credit fund after initial ₹1,200 cr raise
Summary
Kotak Credit Opportunities fund, launched two months ago, lends to companies with stable cash flows, adequate scale, and some vintage. It funds companies for special situations like acquisitions, exits for financial investors, warrant exercises, or corporate reorganizations, IPO-bound companies.
Kotak Mahindra Asset Management Company is targeting an additional ₹800 crore from wealthy individuals and firms for its new Kotak Credit Opportunities fund, after raising an initial ₹1,200 crore, Saurabh Tripathi, chief investment officer (CIO) at the company's private credit, said.
Kotak Credit Opportunities fund, launched two months ago, lends to companies with stable cash flows, adequate scale, and some vintage. It funds companies for special situations like acquisition financing, exits for financial investors and minority shareholders, warrant exercises, or corporate reorganizations, IPO-bound companies, and family-owned businesses undergoing settlements.
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It stays away from lending to companies where the dependency is on back-ended events like IPOs or refinancing. "Our underwriting is based on free cash flow and operational performance—not assumptions about future capital events. We will not lend based on uncertain outcomes." Tripathi said. It has a fixed tenure of 5 years after which the money will be returned to the investors.
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Tripathi projected India's private credit market to expand to roughly 1-1.5% of GDP by 2030, fuelled by its demographic advantage and global uncertainties making India a more attractive destination. Plus, a less favourable IPO market will increase the demand for alternative capital. Private equity investors who need exits as well as promoters looking to avoid dilution will also seek private credit.
Deals growth
In 2024, India saw private credit deals worth $9.2 billion across 163 transactions, a growth of 7% by value, according to an EY report.
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Tripathi foresees consolidation among smaller private credit funds as increased investor interest drives down returns. He believes that only large, institutionally-backed players with strong underwriting, scale, and diverse revenue streams, like Kotak Mahindra AMC, will thrive, while boutique firms could face existential challenges.
The fund sees strong tailwinds over the next 5-10 years in sectors like power, sustainability, value-added products, and APIs. "These sectors give us comfort due to the reliable cash flows they generate, favourable policy developments, and the overall market environment," said Tripathi.
Kotak Credit Opportunities fund is a Sebi-registered Category II Alternate Investment Fund (AIF).
