Kotak Investment Advisors launches pre-IPO fund, aims to raise Rs 2,000 crore

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The Kotak Pre IPO Opportunities Fund has been positioned as an India-focused late-stage fund to invest in high-quality companies with a strong moat of technology.

Kotak Investment Advisors launches pre-IPO fund, aims to raise Rs 2,000 crore

Kotak Investment Advisors Ltd (KIAL), the alternative assets arm of the Kotak Mahindra Group, has launched a pre-IPO fund - the Kotak Pre IPO Opportunities Fund, the Mint reported.

The fund, a category II Alternative Investment Fund (AIF) has been positioned as an ‘India focused late-stage fund to invest into high-quality companies with a strong moat of technology,’ said the report.

AIFs have a minimum investment ticket of Rs 1 crore. Investing in pre-IPO companies has garnered investor interest in India of late with high-profile IPOs such as Barbeque Nation hitting the market and others such as Paytm slated to go public in the near future.

According to the investor presentation for the fund, the fund will aim to raise Rs 1,000 crore with another Rs 1,000 crore as a greenshoe option, the report added. It will have a tenor of 5 years from the final close.

It will levy a fee of 1.8 percent for investments of less than Rs 10 crore with 1.5 percent for the direct option of such investments. For higher investments, charges will be lower at 1.5 percent for the regular option and 1.2 percent for the direct option. The direct option is for advisory clients of KIAL.

Apart from this fee, the fund will also charge a performance fee (carry) of 20 percent of profits above a hurdle rate of 10 percent pre-tax. In other words, the fund must deliver a return of more than 10 percent for the performance fee to kick in. For investments greater than or equal to Rs 10 crore, carry will be 15 percent.

The pre-IPO fund will target investments ranging from Rs 25 crore to Rs 200 crore and have an average holding period of around 3 years. It will target ‘late-stage high-quality companies' according to its presentation in sectors like fintech, consumer tech, ed-tech, health tech and software as a service, Mint reported.

B Amrish Rau, CEO of Pine Labs, Haresh Chawla, Partner, True North and Nitin Deshmukh, Advisor, Kotak Private Equity will act as advisors to KIAL for the fund in a non-binding capacity, the presentation added.

In May, Kotak Special Situations Fund (KSSF), an alternative investment fund managed by KIAL had acquired a 74 percent stake in HKR Roadways Ltd. It also funded the debt in the company for a one-time settlement (OTS) with existing lenders for a total consideration of Rs 715 crore.

KSSF focuses on alternate assets business and currently manages a $1 billion fund with a mandate to invest in special situations, credit and distressed space in India.

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