Kotak Alternate Assets has marked the first close of its data center fund at $590 million.
This number is ~74 percent of the company’s original $800m target, and the fund is domiciled in the Gujurat International Finance Tec-City (GIFT City).
First announced in November 2022, the investment arm of India’s Kotak Mahindra Bank has been raising funds to invest in building data center capacity. This is expected to total between five and seven large data center assets across the country, and to support the data-backed digital economy, enterprise cloud, 5G, and the Internet of Things (IoT) expansion.
“Being a high CAPEX industry requiring capacity build-up, we believe that there is an equity investment opportunity to back partners in creating capacities,” said Rahul Shah, executive director at Kotak Investment Advisors Ltd.
Shah went on to say that the company will be providing strategic risk capital and value-added support to its partners. It has not disclosed any external investors.
According to the Economic Times (ET), the fund will focus on the Mumbai, Chennai, Noida, and Hyderabad regions due to the rising demand in those areas.
Shah told ET that the company has already received proposals from data center developers and operators.
Shah added: “We have received [a] solid response so far and the same is reflected in the first close. We expect the entire fundraising to be completed in the next 6-9 months, while the fund will be fully deployed over the next four years.”
“India is on the cusp of a data revolution. Data centers are therefore at the core of the country’s Digital India ambition,” Srini Sriniwasan, managing director of Kotak Investment Advisors Limited, said.
This is not the first interest that Kotak has shown in the data center industry. In November 2021, the company invested $135m in Indian internet services provider Sify to contribute towards its data center expansion.
India has a significantly developing data center market. According to Statista, the revenue earned by India’s data center market is expected to reach $7.83 billion this year, and $9.27 billion by 2027. This month so far has seen STT GDC sign a memorandum of understanding with the Uttar Pradesh government to build in the region, Cyfuture commit to building a fifth facility in India, and Digital Realty break ground on its Chennai data center.