India: Kotak Realty Fund exits Lodha’s Mumbai township project at 18% IRR

Photo: Mint

Kotak Realty Fund, a part of Kotak Investment Advisors Ltd, has exited its investment in real estate firm Lodha Group’s township project, Palava City, in suburban Mumbai.

Kotak, which had invested around Rs540 crore in 2015 from its $400 million offshore fund, has exited with around Rs838 crore, at an internal rate of return (IRR) of 18%.

“As per our stated strategy, we are repaying all high cost debt. We have given the exit as per the agreed terms, at end of the lock-in period. The exit was funded partly by our internal accruals and partly by refinancing. This exit has helped us meaningfully lower our overall cost of funds,” said Ahishek Lodha, managing director, Lodha Group.

A Kotak Realty Fund executive confirmed the exit but didn’t wish to be named.

Lodha’s Palava is a 4500-acre development in the Kalyan-Dombivli suburb and is being developed as a greenfield smart city. Since its inception, in the last seven years, Palava is home to over 29,000 families.

From Kotak’s $400 offshore fund that was raised in 2013-14, which also included a commitment of around $200 million from sovereign wealth fund Abu Dhabi Investment Authority, a number of exits have already happened at an average IRR of 20%.

It has recently also exited from Gurgaon-based SS Group’s project, where it had invested Rs125 crore, with 21% IRR, the executive said.

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