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Richest Asian banker plans family office but spurns crypto

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The family of Uday Kotak, billionaire managing director of Kotak Mahindra Bank Ltd. is setting up an office to invest in assets including private equity, stocks and real estate worldwide.

[MUMBAI] The family of Uday Kotak, billionaire managing director of Kotak Mahindra Bank Ltd. is setting up an office to invest in assets including private equity, stocks and real estate worldwide.

"The funds will be deployed in asset classes other than debt and cryptocurrencies," Venkat Subramanian, who will manage the family office, said in an interview in Mumbai last week. "We will also stay clear of any investment opportunities that will bring us in direct competition with the bank."

While Subramanian didn't disclose a figure, Kotak has about US$1.2 billion in cash and investable assets, according to the Bloomberg Billionaires Index. Most of the money was raised when he cut his stake in the bank to meet regulatory requirements.

The Mumbai-based banker, whose US$10.3 billion fortune makes him the eighth-richest person in India and the wealthiest banker in Asia, held about 30 per cent in Kotak Mahindra Bank as of end-September, which is worth US$9 billion based on current prices. That's down from 33.6 per cent in December 2016, a little before the Reserve Bank of India directed the company to gradually reduce the founders' stake to 15 per cent by March 2020 in line with guidelines for bank licenses.

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Kotak started out in finance in 1985 by setting up an investment company with a 3 million rupee (S$63,000) loan from family and friends. Today he controls India's fourth-largest private-sector lender by assets. Kotak Mahindra shares have risen about 42 per cent over the past year, compared with a 39 per cent gain for the Bankex Index, a gauge of 10 lenders in the country.

Subramanian, who is currently chief executive officer at Infina Finance Pvt, a US$470 million long-short fund that has Kotak and his bank as sole investors, is working with members of Kotak's family to put in place a team to manage the office. Kotak hadn't set up a family office so far as most of his wealth was locked in the bank's equity until March 2017.

Investing in debt would bring the family office into direct competition with the bank, while purchases of bitcoin may prove to be risky, Subramanian said. The world's largest cryptocurrency has tumbled more than 20 per cent from a mid-December high.

"While the concept of cryptocurrency is alluring, as its value cannot be influenced by any government, the family office will not look at investing in it," Subramanian said. He also flagged possible regulatory clampdowns and the addition of new global cryptocurrencies as risks to value.

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