Kotak Investment Advisors Ltd (KIAL), the alternative assets arm of the Kotak Mahindra Group has launched a pre-IPO fund — the Kotak Pre IPO Opportunities Fund.
The fund, a category II Alternative Investment Fund (AIF) has been positioned as an ‘India-focused, late-stage fund to invest in high-quality companies with a strong moat of technology.’
AIFs have a minimum investment ticket of ₹1 crore. Investing in pre-IPO companies has garnered investor interest in India of late with high-profile IPOs such as Barbeque Nation hitting the market and others such as Paytm slated to go public in the near future.
According to the investor presentation for the fund, it will aim to raise ₹1,000 crore with another ₹1,000 crore as greenshoe option. It will have a tenor of 5 years from the final close. It will charge a fee of 1.8% for investments of less than ₹10 crore with 1.5% for the direct option of such investments.
For higher investments charges will be lower at 1.5% for the regular option and 1.2% for the direct option. The direct option is for advisory clients of KIAL. Apart from this fee, the fund will also charge a performance fee (carry) of 20% of profits above a hurdle rate of 10% pre tax.
In other words, the fund must deliver a return of more than 10% for the performance fee to kick in. For investments greater than or equal to ₹10 crore, carry will be 15%.
The pre IPO fund will target investments ranging from ₹25 crores to ₹200 crores and have an average holding period of around 3 years. It will target ‘late stage high quality companies’ according to its presentation in sectors like fintech, consumer tech, ed tech, health tech and software as a service.
B Amrish Rau, CEO of Pine Labs, Haresh Chawla, Partner, True North and Nitin Deshmukh, Advisor, Kotak Private Equity will act as advisors to KIAL for the fund is a non-binding capacity, the presentation added.