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Kotak Realty reaps 25% return on Noida IT park sale

  • Susannah Birkwood
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Kotak Realty Fund, the properties arm of Kotak Mahindra Bank, has reaped an IRR of less than 30% on the sale of its interest in a Noida-based information technology park.

The investor sold its 35% stake in the project located in the northern state of Uttar Pradesh back to real estate builder 3C Company, from which it bought the shareholding for around INR650 million ($12.3 million) in 2007.

Commenting on the fact that only 14 PE-backed real estate assets were sold in India last year, Kotak chief executive Sam Sriniwasan told Livemint that exits will happen more quickly once residential sales pick up. "In real estate, the momentum of exits needs to continue though there may be some exits in one's portfolio which will make a lot of money and some won't," he said.

Another private equity investor, Red Fort Capital, invested in a project being developed by 3C Company in Noida back in February 2010. The investment was somewhere between $21.4-28 million for a 50% stake in a residential housing project. And earlier this week, Red Fort announced it is targeting INR10-15 billion ($500 million) for its latest property fund.

Kotak, meanwhile, revealed last month that it raised INR5.23 billion ($98.2 million) from domestic LPs for a fund that will provide high-yield debt instruments to real estate developers. The vehicle will focus on residential housing.

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