Kotak Mahindra Group, the Mumbai-based financial services group, will consolidate its private equity investment (PE) activities under a separate alternative investments subsidiary. The company will open for business in October with approximately $1.5 billion (about Rs6,150 crore) in capital under management. This includes just the group’s private equity funds though new alternative investment products, among them a hedge fund, are in the pipeline, said a person close to the group, who did not want to be named. The spokesperson for Kotak Private Equity Group (KPEG) declined comment. Kotak’s move to integrate and expand its alternative investments activities, including PE, echoes similar moves by financial groups globally and in India in recent times. Notably, financial services conglomerate Citigroup Inc. acquired Old Lane LP in April, which was a New York-based hedge fund with India operations. Mumbai-based PE firm ICICI Venture Funds Management Co. is also raising a hedge fund. The move is also reflective of the blurring of lines between PE and hedge fund investors globally, the ripple effects of which are being felt in the Indian market with the entry of foreign hedge funds, such as DE Shaw & Co., LP, Tiger Global Advise Pvt. Ltd, Och-Ziff Capital Management Group Llc. and New Vernon Capital Llc. in the PE deal market here.   more »

India-dedicated fund first to register as FII. Private equity player Baer Capital Partners plans to launch $ 250 million India-dedicated hedge fund by the year-end. Baer Capital is the first hedge fund to announce its India plans, after the recent proposal by the Securities and Exchange Board of India allowing direct entry of hedge funds. The fund is likely to be called Beacon India Growth Fund. Baer Capital will have to register as a foreign institutional investor (FII). The fund will be investing in public (or listed) companies. It will be a long biased hedge fund using futures/derivatives to hedge itself against market decline. It will have more flexibility to stay in cash or take concentrated position and will be focused mainly on the mid-cap stocks across sectors. “We have applied for our FII registration and we expect a minimum annual return of 25-30 per cent out of all our investments both through private equity and hedge fund. We will see more of hedge funds coming to India in the coming days and a lot of strategic activity happening in the space as hedge funds bring a lot of liquidity and efficiency into the capital markets, “said Alok Sama, president & founder, Baer Capital Partners.   more »