Kotak AMC Enters Private Credit Market with ₹2,000 Crore Fund

Kotak Mahindra AMC, a subsidiary of Kotak Mahindra, is set to expand into the alternative investment fund (AIF) segment by launching a private credit fund next month.

Fund Details

The private credit fund aims to raise ₹1,500-2,000 crore to provide debt financing for unlisted companies. The fund will cater to acquisition financing and capital expansion needs. Kotak AMC will contribute 20% of the total amount, and the fundraising is expected to conclude within a year, according to Deepak Agrawal, CIO of Fixed Income at Kotak AMC.

Alternative to Bank Financing

Private credit funds offer companies an alternative to traditional bank loans, particularly for those with lower credit ratings or flexible repayment needs. These funds typically generate returns between 13% and 16%, said Saurabh Tripathi, CIO-Private Credit at Kotak AMC.

Entry into a Growing Market

While several fund houses, including Aditya Birla Sun Life AMC, have entered this space, Kotak AMC sees significant opportunities in the Indian market. Earlier this year, Aditya Birla Sun Life AMC launched a ₹2,500 crore performing credit fund.

Increasing Demand for AIFs

The AIF market in India is witnessing strong interest from ultra-high-net-worth individuals (UHNIs) and family offices, with total commitments exceeding ₹12 trillion. Reports estimate India’s private credit assets under management (AUM) could reach $60-70 billion by 2028.

Rising Deal Size

A recent report by Praxis and the IVCA highlighted the growing scale of private credit in India. The average deal size increased from $33 million in 2022 to $80 million in 2023, with $5.1 billion deployed in the first half of the year.

Kotak AMC’s entry into private credit aligns with the sector’s rising prominence, addressing capital needs and offering investment opportunities in India’s evolving financial landscape.

Kotak Mahindra Bank Share price is trading at ₹1,749.80 as of 11:22 AM on December 5, reflecting a decline of ₹7.70 or 0.44% from the previous close. The stock opened at ₹1,764.00 and reached an intraday high of ₹1,764.50, while the low for the session stood at ₹1,749.45.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.