MUMBAI: In the largest ever fund raising for housing in India, HDFC Capital Advisors Ltd, a wholly-owned subsidiary of HDFC Ltd, has raised $550 million under the initial close of its second affordable housing fund, the HDFC Capital Affordable Real Estate Fund – 2 (H-CARE-2).
This fund will be combined with the HDFC Capital Affordable Real Estate Fund – 1 (H-CARE-1) raised in 2016 to create a $1 billion platform to invest in affordable and mid-income residential projects in India's top 15 cities.
"These funds will play a significant role in progressing towards the 'Housing for All by 2022' objective of the government. Affordable housing will not only act as a growth driver for the real estate industry in India but will also be a catalyst for GDP growth," said Deepak Parekh, Chairman, HDFC. "The current lack of flexible, long-term capital is one of the key challenges facing developers of affordable and mid income housing in India. The H-CARE funds will focus on providing leading developers access to financing at attractive rates and on flexible terms."
The initial close includes the commitment of the sponsor HDFC and investor the Abu Dhabi Investment Authority (ADIA), world's second largest sovereign wealth fund. HDFC Capital has already invested $250 million out of total $450 million raised in 2016 under H-CARE-1.
"India's housing market presents a compelling investment opportunity driven by the country's continued economic growth and backed by supportive government initiatives. Our investment in HDFC's platforms aims to meet the strong demand for early-stage financing of housing projects and encourage the continued growth of the affordable and mid-income residential sector," said Khadem AlRemeithi, Executive Director of the Real Estate & Infrastructure Department, ADIA
Both H-CARE-1 and H-CARE-2 are category II Alternative Investment Funds with tenure of 12 years and 9 years, respectively.
The primary objective of this platform, headed by Vipul Roongta – CEO, HDFC Capital Advisors, is to provide long term, equity and mezzanine capital to marquee developers at the land and pre-approval stage for the development of affordable and mid-income housing in India.
This aligns with the government of India's goal to increase overall housing supply, including 'Housing for All by 2022' initiative. The primary investor in both H-CARE-1 and H-CARE-2 is a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA).
"Affordable housing is a critical component of quality urban infrastructure as also a growth driver for the real estate industry in India. H-CARE 1 and H-CARE 2 will look to partner with developers to form long term platforms focusing on affordable and mid income housing," said Keki Mistry, Vice Chairman & CEO, HDFC.
HDFC, India's largest mortgage lender, will be the sponsor and HDFC Capital Advisors will be the investment manager for H-CARE-2 that would aim to invest in projects spread over 75 million sq ft across affordable and mid-income residential projects over a period of two-to-three years.
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