INSUBCONTINENT EXCLUSIVE:
MUMBAI: Kotak Investment Advisors, which manages about $3.5 billion worth of assets, is set to begin deploying th
e
money it has
raised in the past month via two funds that are backed by Abu Dhabi Investment Authority (ADIA).
Big opportunity lies ahead in India in
distressed assets and commercial real estate space,” said S Sriniwasan, managing director, Kotak Investment Advisors
“While we are in advanced talks with loan assets that have not yet reached NCLTs, we have also identified two office properties in
Bangalore and Hyderabad.”
Sriniwasan said, “We have significant viability to deploy up to 20% of the capital raised over the next two to
three months.”
The advisory arm of Kotak group has mopped up over $1 billion through the two funds as the company looks to invest in
assets, which appear to be generating enough cash and where the banks are willing to take a reasonable haircut in debt.
In the last one
month, it has raised $625 million under Kotak Special Situation Fund, which is aimed at providing bespoke financial solutions and investment
opportunity in companies that are negotiating settlements on stressed loans
Earlier this week it launched India Office Assets Fund, raising $400 million.
UAE-based sovereign wealth fund Abu Dhabi Investment Authority
has committed $500 million and $200 billion in the two funds.
Sriniwasan has been managing alternative assets for the last one and a half
He favours changes in the country’s Insolvency and Bankruptcy Code, which has triggered a paradigm shift in how bad loans are dealt
with.
“The National Company Law Tribunal (NCLT) courts have passed orders, which defeat central purpose of IBC regulations
Moreover, the bidding process to buy bad loans should also be more transparent as there should be sanctity and strict adherence of bidding
Entertaining bids at any time, even after due date, discourages serious bidders to open their cards,” he said
“We should not allow board directors of erstwhile management to have access to CoC (Committee of Creditors) proceedings.”
In light of
the new amendment under 12A of IBC, if 90% of creditors agree, the company can be taken out of the IBC process.
The risk of allowing
erstwhile directors to COC proceedings is that the promoters will use the information to exercise 12A
As a consequence, serious bidders will be reluctant to bid aggressively.
According to Sriniwasan, IBC caters to evolution of bond market as
creditor protection encourages greater investor participation
This will lead to all varieties of investors coming, including into high risk bonds
“You are going to witness the birth of junk bond market in India”, he said.