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The fund will focus on investing in regions including Mumbai, Chennai, Noida, and Hyderabad that are witnessing significant rise in demand for these services.
Domiciled in GIFT City, Kotak Data Centre Fund is the first India-focused data centre fund to partner with data centre operators to tap the fast-growing digital infrastructure opportunity in the country.
The fund has already received proposals from data center developers and operators seeking investment support and is currently in the process of evaluating the same.
“We have received solid response so far and the same is reflected in the first close. We expect the entire fund raising to be completed in the next 6-9 months, while the fund will be fully deployed over the next four years,” Rahul Shah, Executive Director, Kotak Investment Advisors, told ET.
On Tuesday, the fund announced its first close worth over $590 million nearly Rs 4,900 crore.
The first close of the fund has witnessed commitments from large institutional investors including sovereign and pension funds.“We have been studying the data center industry for the last 3-4 years… The current data centre capacity in India is significantly lower than the fast-growing requirement,” Shah said while adding the fund will provide strategic risk capital to its partners at scale and participate in their success while providing value-added support.
According to him, being a high-capex industry requiring significant capacity build up, it offers a robust equity investment opportunity to back partners in creating capacities.
In November 2021, Kotak Investment Advisors’ Kotak Special Situations Fund (KSSF) had invested over Rs 1,000 crore in Sify Technologies subsidiary Sify Infinit Spaces.
Sify Infinit Spaces is a leading data center services player in India, serving Indian and global enterprise customers and hyperscalers from its over ten operational data centers across the country.
Kotak Data Centre Fund will be investing in data centers across key cities including Mumbai, Chennai, Noida, and Hyderabad that are witnessing significant rise in demand for these services.
Kotak Investment Advisors focuses on alternate assets management and investment advisory businesses. Since 2005, it has raised, managed, and advised over $7.5 billion across asset classes including real estate, private equity, infrastructure, special situations fund, and investment advisory.
Recently, Kotak Realty Fund’s 13th fund achieved its first closure with a $500 million commitment from the sovereign wealth fund Abu Dhabi Investment Authority (ADIA).
With a population of over 1.4 billion, the world’s fifth-largest economy in terms of GDP and an expanding focus on the digital delivery of services, India represents a key market opportunity to extend coverage, capacity and connectivity options for the world’s leading service providers as well as local and global enterprise customers.
India is a high-growth market, with data centre demand expected to significantly increase, driven by rapidly growing data consumption, the digitization of the economy, the onset of 5G and data localisation trends.
The 5G-driven growth in over-the-top (OTT) video streaming, online gaming, augmented reality, and digital commerce is expected to drive data usage and this would also push the growth of data centres.
Global majors like Microsoft and Amazon apart from Google have already started setting up their hyperscale data centres in India.
This clearly indicates the rising preference for India among global data centre majors and is attributed to the data localisation norms and the government’s proposed new data centre policy aimed at simplifying the rules. The new data centre policy is also expected to provide necessary clearances and infrastructure in a time-bound manner.
Additional factors, such as the new submarine cable infrastructure linking Mumbai and Chennai to Singapore, South East Asia, Europe, and the Middle East, will help position India as a more attractive Asia-Pacific location for data centre development, expansion, and investment in the years to come.
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