Kotak Investment Advisors Limited (KIAL), the alternative assets arm of Kotak Mahindra Group backed by one of Asia’s richest bankers Uday Kotak, on Tuesday said its Strategic Situations Fund II has raised $1.25 billion in its first close.

With a target of $1.6 billion, the sector-agnostic fund comes a month after the $1-billion Kotak Special Situations Fund completely deployed its corpus. It last invested Rs. 1,070 crore in Biocon.

“In line with the changing market, the fund is now positioned to provide strategic solution capital for unique circumstances and to finance the impending capex growth cycle that we expect to play out over the next couple of years,” Eshwar Karra, CEO, Kotak Special Situations Fund, said.

The Special Situation Fund’s investment objective is to generate target returns by primarily investing in distressed/stressed or special situation opportunities in India.

Investments typically involve a combination of debt, equity and mezzanine instruments, the firm said, adding that it is focused on opportunities in special situations like investor take-out financing, group restructuring and promoter financing, credit and distressed assets under Insolvency and Bankruptcy Code (IBC), pre-IBC opportunities, and assets under liquidation.

Through the fund, the firm has invested in companies including OmniActive Health Technologies, Jindal Stainless Steel, HKR Roadways and Prius Commercial Projects.

Set up in early 2005, KIAL, which manages Kotak Alternate Assets, has raised, managed, and advised a total of over $8.7 billion across different asset classes, including real estate, private equity, infrastructure, special situations fund, and investment advisory.