Kotak Alternate Asset Managers is aiming to raise up to $2 billion for its third private credit fund, reflecting growing investor appetite for the asset class in India despite broader global market volatility, according to a Bloomberg report. The planned fundraise highlights continued expansion in India’s private credit market as investors seek yield opportunities outside traditional banking channels.
The firm is targeting a final close by September and intends to deploy capital across sectors including data centers, pharmaceuticals, diagnostics, steel, and cement. The strategy underscores a focus on industries benefiting from structural growth trends in India’s economy.
India’s private credit market has been expanding rapidly, reaching approximately $12.4 billion in 2025, representing growth of about 35%. The rise has been driven by increasing demand for alternative financing solutions and large transactions across infrastructure and industrial sectors.
Kotak’s approach differs from some developed markets such as the US, where open-ended private credit vehicles have recently faced redemption pressures. In contrast, India’s predominantly closed-ended fund structures help mitigate the risk of sudden investor outflows. However, currency volatility remains a key concern for international investors, particularly as the Indian rupee has weakened against the US dollar amid rising energy costs.
The new fund, expected to be raised through Kotak’s GIFT City platform, will primarily invest in debt instruments with potential conversion into equity, aligning with the firm’s broader special situations strategy.
Kotak has previously launched two private credit funds, including a $1 billion special situations fund and a $1.5 billion strategic situations fund. These vehicles have backed companies such as Sify Technologies, AGS Transact Technologies, and Nuvoco Vistas Corp. The firm also manages a $664 million infrastructure-focused vehicle, further reinforcing its presence in alternative assets.
