Kotak Mahindra (UK), a wholly owned subsidiary of India’s Kotak Mahindra Bank, has announced plans to launch a fund of funds denominated in US dollars with exposure Indian government se
Kotak Mahindra (UK), a wholly owned subsidiary of India’s Kotak Mahindra Bank, has announced plans to launch a fund of funds denominated in US dollars with exposure Indian government securities and corporate bonds.
The fund is open to institutional investors, private banks and family offices in the UK, Europe, the Middle East and East Asia.
The Kotak India Income Fund will aim to generate returns through a strategic allocation to domestic income funds with exposure to Indian government securities and corporate bonds.
The fund will aim to invest in a basket of funds considering their average maturity and portfolio composition.
Shyam Kumar (pictured), chief executive of Kotak Mahindra (UK), the fund’s investment manager, says: ‘The corporate debt market in India is relatively immature compared to other debt markets around the world. Fixed-income funds came into the limelight in India in 2008 as the sub-prime and credit crisis led to equities taking a hit globally. The current scenario of softening interest rates presents a good opportunity for Kotak to add a debt fund to our portfolio.
‘Debt and gilt funds recorded the highest growth, both in terms of performance and assets under management during 2008, and the scenario this year is expected to resemble that during early 2001-03 when, post the dotcom bust, the Reserve Bank of India reduced interest rates in a bid to boost economic growth. Fixed income funds in India have already attracted huge inflows with Debt funds alone attracting more than USD1bn in December 2008.’
The launch coincides with the government of India’s decision to increase the cumulative debt investment limit by USD9bn (from USD6bn to USD15bn) for foreign institutional investors in corporate debt. A formal bidding process for this additional allocation is expected to be conducted shortly by the regulator.
Kotak Mahindra (UK) is a member of the London Stock Exchange and is registered with the Securities Exchange Board of India as a foreign institutional investor. It has branch offices in Singapore and Dubai.