Kotak Real Estate Investment Fund II - IFSC

Kotak Mutual Fund

Established in 1985 by Mr. Uday Kotak, it was thefirst Indian non-banking financial company to be given a banking license by the Reserve Bank of India in February 2003. The group caters to the financial needs of individuals and institutional investors across the globe. Kotak Mahindra Group (Group), founded in 1985, is one of India's leading financial services conglomerates. In February 2003, the Reserve Bank of India (RBI) granted Kotak Mahindra Finance Ltd. (KMFL), the Group's flagship company, a banking license, making it India's first non-banking finance company to convert into a bank - Kotak Mahindra Bank Ltd. The Group provides a broad range of financial services that cover all aspects of life. The Group offers a wide range of financial services to individuals and businesses, including commercial banking, stockbroking, mutual funds, insurance, and investment banking. The Group has a large distribution network that includes branches and franchisees throughout India, an International Business Unit at DIFC in Dubai, and international offices in London, New York, Dubai, Abu Dhabi, Mauritius, and Singapore. Kotak Mahindra Bank is the flagship company of the Kotak Mahindra Group, a leading financial services conglomerate headquartered in Mumbai, India. About Kotak Mahindra Bank - GIFT City Branch Kotak Mahindra Bank established its International Financial Services Center Banking Unit [IBU] in Gujarat International Finance Tec (GIFT) City on May 3, 2016. GIFT is India's first global financial and IT services hub, designed in the style of global financial centers and overseen by the International Financial Services Centres Authority. The branch serves a global customer base and offers a diverse range of products and services, including deposits, loans and advances, and treasury services.

Fund Snapshot

Fund Attribute	Details
Fund Name	Kotak Real Estate Investment Fund II – IFSC
Fund Manager	Kotak Alternate Asset Managers Limited (KAAML)
Regulatory Authority	International Financial Services Centres Authority (IFSCA)
AIF Category	Category-II AIF (Alternative Investment Fund)
Registration Number	IFSC/AIF2/2024-25/0181
Date of Registration	October 18, 2024
Domicile / Base	GIFT SEZ, GIFT City, Gandhinagar, Gujarat, India
Target Investors	Global Institutional Allocators, Family Offices, and Offshore UHNIs
Base Currency	Typically US Dollar (USD)

Fund Overview

The Kotak Real Estate Investment Fund II – IFSC is a closed-ended private equity real estate fund. It belongs to Kotak’s generation of vehicles optimized for the GIFT City ecosystem.

By operating within the International Financial Services Centre (IFSC), the fund is structural proofing for global investors. Instead of dealing with the friction of inbound domestic capital rules, currency hedging hurdles, and cumbersome local administrative processes, international allocators can commit and draw down capital in global currencies (like USD). The fund then operates as a unified corporate investor into Indian micro-markets, reducing operational drag while targeting top-tier real estate developments.

Investment Philosophy

Managed by Kotak’s seasoned alternative asset team—which possesses nearly two decades of real estate experience and over $3.5 billion in aggregate capital commitments—the fund follows a strictly defensive, return-optimized philosophy:

Late-Stage Real Estate Funding: The strategy strongly leans away from greenfield or speculative raw-land acquisition risks. Instead, it focuses on late-stage execution, construction financing, and inventory-backed bridge capital for residential and commercial assets.
Tier-1 Developer Selection: Kotak implements a rigorous institutional counterparty filter, partnering exclusively with top-caliber, highly capitalized developers. This ensures that the projects backed by the fund benefit from premium governance and strong execution velocity.
Granular Cash-Flow Underwriting: Investments are structured with strong downside protection. Rather than relying on simple equity upside, deals frequently leverage structured debt, milestone-dependent disbursements, and cash-flow trapping mechanisms to lock in visible exit paths.
Exits Aligned with Institutional Liquidity: The fund designs multi-tiered exit paths from day one, planning liquidity via project execution cash flows, developer buybacks, or secondary portfolio sales to public Indian Real Estate Investment Trusts (REITs).

Fund Manager

Uday S. Kotak

Uday S. Kotak is the Chairman and Non-Executive Director of the Company, plus he founded and directs Kotak Mahindra Bank Limited. He used to be the Bank's Managing Director and CEO until September 2023. Now, he's in a non-executive position, still helping steer the bank's future. He has almost 40 years of experience and was a key player in growing the Kotak Mahindra Group into one of India's top financial service groups. They do all sorts of things like banking, asset management, insurance, and capital markets. People think of Mr. Kotak as someone who really helped shape India's financial scene. He's been in charge of the Indo-UK Financial Partnership and been on global advisory boards. He's also headed big governance projects and won a bunch of awards for his career and business smarts. He got his bachelor's degree in commerce and an MMS from JBIMS, Mumbai.

Frequently Asked Questions

What is the distinction between this fund and Kotak's domestic real estate funds? +

The primary difference is the regulatory environment and currency framework. Domestic funds require foreign investors to convert capital into Indian Rupees (INR) and comply with direct onshore tax structures. This IFSC fund allows offshore allocators to invest, maintain, and redeem their capital natively in foreign currency (typically USD) under a highly efficient international financial regulatory system (IFSCA).

What specific real estate segments does this vehicle target? +

The fund targets institutional-grade real estate sectors within India’s top metropolitan micro-markets (such as Mumbai, Bengaluru, National Capital Region, and Pune). This covers structured real estate credit and opportunistic equity across Grade-A residential developments, commercial IT parks/offices, and logistics or industrial warehousing.

What is the regulatory minimum ticket size for this fund? +

In accordance with the regulatory standards established by the IFSCA for Category-II Alternative Investment Funds in GIFT City, the minimum investment requirement for a qualified individual investor is $150,000 USD (or its equivalent in other convertible foreign currencies).

How is the fund regulated? +

The fund is fully registered and supervised by India's unified financial services regulator for offshore hubs: the International Financial Services Centres Authority (IFSCA) under registration number IFSC/AIF2/2024-25/0181.

What tax benefits do offshore investors receive by using this GIFT City structure? +

Category-II AIFs in GIFT City provide non-resident and global investors with an incredibly competitive tax pass-through structure. Capital gains and interest yields are generally optimized via favorable withholding rates under India's Double Taxation Avoidance Agreements (DTAA), alongside complete exemptions from local Indian surcharges and simplified compliance overhead.

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