A wholly-owned subsidiary of the Abu Dhabi Investment Authority, ADIA, has partnered with Kotak Investment Advisors Limited to launch the Kotak Special Situations Fund, which will target a range of Non-Performing Loan, NPL, opportunities in India.
The fund is being anchored by a US$500 million commitment from a wholly-owned subsidiary of ADIA. It will target both pre-stress and distressed opportunities, with a key focus on providing financial support to pre-stress businesses to prevent them from entering insolvency.
The fund’s objectives align with the stated commitment from the Government of India to reduce the volume of non-performing assets in the economy.
Speaking on the occasion, Hamad Shahwan Aldhaheri, Executive Director of the Private Equities Department at ADIA, said, “Institutional investors can play an important role in building a successful secondary market for non-performing loans in India. With a broad mandate to invest across asset types and sectors, our new partnership with Kotak will contribute to this process and help to ease the burden of NPLs on the Indian financial system.”
As a long-term investor in India, ADIA holds directly or through its subsidiaries investments innumerous asset classes including equities, fixed income, real estate and private equity, among others. It has increased activity in India over recent years, encouraged by the country’s strong and ongoing economic growth and steadily maturing regulatory and legal systems. A number of recent ADIA investments align closely with key Indian government priorities, including affordable housing, infrastructure development, renewable energy and corporate credit.
The Kotak Special Situations Fund is structured as an Alternative Investment Fund under Securities and Exchange Board of India, SEBI, regulations. It will be managed by the Alternate Asset Management AMC – Kotak Investment Advisors Ltd. and will be led by Eshwar Karra, former CEO of Phoenix ARC, who has significant experience in the stressed asset space.
In turn, Srini Sriniwasan, Managing Director and CEO, Kotak Investment Advisors Ltd., said, “The Kotak Special Situations Fund has been created to address the NPL issue and market dislocation by providing much-needed capital and momentum to finding resolutions in both pre-stress and distressed situations.”