HDFC Capital Raised USD 1 Billion Fund For Affordable Low Cost Housing
HDFC Capital has raised USD 1 billion to create a real estate fund that would invest in affordable low cost housing and mid-income housing projects in the top 15 cities of the country.
In 2016, HDFC’s arm HDFC Capital Advisors had raised USD 450 million in its first fund for affordable low cost housing and it has now raised USD 550 million in the second fund, taking the total size to USD 1 billion, making it one of the biggest fund raising exercise in this segment.
HDFC is the sponsor of the fund and Abu Dhabi Investment Authority (ADIA) is a major investor. HDFC Capital Advisors has successfully achieved the initial close of second affordable low cost housing fund ‘HDFC Capital Affordable Real Estate Fund– 2, HDFC said in a statement.
The second fund will be combined with the HDFC Capital Affordable Real Estate Fund–1 raised in 2016 to create a USD 1 billion platform targeting affordable and mid-income housing.
Commenting on the development, HDFC Chairman said: “These funds will play a significant role in progressing towards the ‘Housing for All’ by 2022 objective of the government”. The affordable low cost housing would not only act as a growth driver for the real estate industry in India but will also be a catalyst for GDP growth, he added.
He said the current lack of flexible, long-term capital is one of the key challenges facing developers of affordable low cost housing and mid income housing in India and added that this fund will focus on providing leading developers access to financing at attractive rates and on flexible terms.
When contacted, HDFC Capital Advisors CEO said these funds have been raised from ADIA and HDFC. This is one of the largest fund raising for affordable and mid-income housing in India. ADIA has invested USD 900 million, while HDFC has put in USD 100 million in form of equity and mezzanine capital, he added. The remaining USD 750 million would be deployed over the next two years.
The objective of this platform 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.
The developers are currently facing the challenge of lack of flexible and long-term capital.
HDFC Vice Chairman & CEO said “Affordable housing is a critical component of quality urban infrastructure as also a growth driver for the real estate industry in India.”
Source Link- http://www.moneycontrol.com/