HDFC Capital raises $550 mn for second affordable housing fund
HDFC Capital Advisors Ltd, a real estate investment advisory arm of mortgage lender Housing Development Finance Corp. Ltd (HDFC), on Thursday said it had raised $550 million in an initial closure of its second affordable housing fund—HDFC Capital Affordable Real Estate Fund-2 (H-CARE-2).
H-CARE-2 will be combined with the first affordable housing fund, H-CARE-1, raised in 2016, to create a $1 billion platform, HDFC said in statement. The platform will invest in affordable and mid-income residential projects in 15 cities across India.
The combined platform will provide both long-term equity as well as mezzanine capital to developers to build 75 million sq. ft of affordable and mid-income residential projects over the next 2-3 years.
“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.
Lack of flexible, long-term capital is one of the key challenges facing developers of affordable and mid-income housing in India, he said. “The H-CARE funds will focus on providing leading developers access to financing at attractive rates and on flexible terms,” Parekh added.
A large chunk of the funds for the initial closure of H-CARE-2 were committed by Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund owned by the Emirate of Abu Dhabi. ADIA is also the primary investor in H-CARE-1.
On Thursday, HDFC also announced the sale of two subsidiaries focusing on real estate brokerage and online property classifieds to Quikr India Pvt. Ltd for a total of ₹350 crore.
HDFC Realty Ltd operates the brokerage business, while HDFC Developers Ltd owns the HDFC Red platform for online real estate classifieds. In a regulatory filing, HDFC said this is an allstock deal, with the mortgage lender taking a minority stake in Quikr India.
“The future of real estate is digital, and Quikr has built a robust technology platform for consumers with products for developers and brokers who stand to benefit in the post-RERA (Real Estate Regulation and Development Act) regime. We hope to derive value from Quikr’s diversified customer base, while offering our strength in the real estate sector,” said HDFC managing director Renu Sud Karnad.