Kotak Mahindra Asset Management Company (AMC) will launch a private credit fund next month, entering the fast-growing alternative investment fund (AIF) space. The fund, targeting US$ 177 million (Rs. 1,500 crore) and US$ 236 million (Rs. 2,000 crore), will focus on providing debt funding to unlisted companies for acquisition financing and capital expansion. Chief Investment Officer (CIO) of Fixed Income at Kotak AMC, Mr. Deepak Agrawal, stated that the company would contribute 20% of the total fund. The company plans to complete the fundraising within the first year and deploy the funds promptly. Private credit funds provide alternative debt financing to companies, especially those with lower credit ratings, offering flexible repayment terms compared to traditional bank financing.
With this launch, Kotak AMC joined several other fund houses that entered the private credit space as investor interest grew. CIO of Private Credit at Kotak AMC, Mr. Saurabh Tripathi, expressed confidence in the opportunities available, stating that despite numerous fund houses, they do not view themselves as late entrants. The target return for the fund is expected to range between 13% and 16%. The private credit segment is witnessing rising interest from ultra-high-net-worth individuals (UHNIs) and Indian family offices, particularly in Tier-II cities, with commitments surpassing US$ 141.63 billion (Rs. 12,00,000 crore). A report by Praxis and the Indian Venture and Alternate Capital Association (IVCA) forecasts the private credit assets under management (AUM) in India to reach US$ 60-70 billion (Rs. 5,08,380-5,93,110 crore) by FY28. In H1 FY23, private credit funds deployed over US$ 5.1 billion (Rs. 43,212 crore), with the average deal size rising to US$ 80 million (Rs. 678 crore) from US$ 33 million (Rs. 280 crore) in FY22.
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