Kotak Mahindra launches $525 million stressed asset fund with The Canadian Pension Plan Investment Board (CPPIB)
Mumbai: Kotak Mahindra Group has tied up with Canadian Pension Plan Investment Board (CPPIB) to launch a $525 million fund to invest in the stressed asset market in India’s banking and corporate sectors.
The Canadian pension fund manager will have the option to invest up to $450 million in this partnership, Kotak Mahindra Group said in a statement on Monday(Mar 14).
This investment will address the growing opportunity arising from the current stress in the Indian banking and corporate sectors, and has a flexible investment mandate providing bespoke financing solutions to companies, in addition to investing in stressed asset sales by banks with the aim to restructure, recover and turnaround companies in distress.
S. Sriniwasan, CEO, Kotak Special Situations Credit Fund, said: “The Kotak Mahindra Group, and its affiliate Phoenix ARC, has been an active player in the distressed and structured credit market for over a decade. The current environment has created a much larger opportunity that requires significant capital commitment. We are delighted to have a world-class institution such as CPPIB put patient capital to work, backed by strong and active asset management, to capitalize on the stressed assets market.”
Kotak Mahindra Bank currently owns 49% stake in Phoenix ARC.
Adam Vigna, Managing Director, Principal Credit Investments, CPPIB, said: “This investment is an important step in CPPIB’s strategy to build a diversified credit business and will add to our direct credit investment capabilities in India. We are pleased to have Kotak as our advisor, and this investment will serve as an excellent complement to our existing credit investment business in Asia. Through this agreement, CPPIB will selectively invest in assets that we believe will deliver value in line with our long-term investment mandate.”
Kotak will act as an advisor. Through this agreement, CPPIB will aim to invest in assets that suits their long-term investment mandate.
Eshwar Karra, CEO, Phoenix ARC Pvt. Ltd. said: “The asset reconstruction industry has limited capital and there is an urgent need for substantial capital to buy non-performing assets from banks, as and when these loans get sold at fair value. This pool of capital with a flexible mandate, will work alongside the ARC, and positions us to comprehensively address the capital needs of both the borrowers and the selling lenders.”
Canada’s pension fund will have the ability to invest up to $450 million in the partnership, Kotak said in a statement.
Kotak ties up with global fund