Kotak Bank’s property investment arm to raise $500 million by the second quarter of this year

In a bet on the long term case for property in Asia's third-largest economy, Kotak Realty Fund, the property investment arm of India's Kotak Mahindra Bank, plans to raise as much as $500 million by the second quarter of this year. The fund intends to raise about $150-$200 million from domestic investors and another $300 million from global markets. Separately, Kotak is raising a $300 million private-equity fund to invest in infrastructure projects in the country.

Kotak Realty Fund had in the last week, sold one of its property assets - Peepul Tree Properties - to Tata Realty Fund for Rs 525 crore or $117 million. The fund had made an initial investment of Rs 95 crore.

Further the fund, which has about $750 million worth of assets under management, plans to invest close to $100 million over the next couple of months in major Indian cities. The investments will mainly be in the residential property assets.

Private equity funds, including four domestic and 10 international funds, have invested a total of $14 billion in Indian property during the last ten years. Of that, private equity firms have sold Indian property holdings worth nearly $2 billion.