HDFC Capital Closes $1-Billion Affordable Housing Fund
HDFC Capital Advisors, an arm of mortgage leader HDFC, has closed its second affordable housing fund, creating a $1-billion corpus. The lion's share of this money is flowing in from the Abu Dhabi Investment Authority. With the latest round of funding commitment from the Abu Dhabi sovereign fund, and those from HDFC which is the sponsor, the fund has raised $550 million as the corpus.
Called HDFC Capital affordable real estate fund-2, it would be combined with the first fund raised in 2016, together creating a $1-billion corpus targeted at affordable and mid-income residential projects in top 15 cities, HDFC said in a statement on December 21. The new funds would have a development footprint of 75 million square foot (sqft) across affordable and mid-income residential projects in the leading 15 cities over the next two-three years, it added.
The main objective of this fund, headed by Chief Executive of HDFC Capital Advisors Vipul Roongta, is to provide long-term equity to marquee developers at the land and pre-approval stage to develop affordable and mid-income housing.
Earlier this week, HDFC had said it would raise up to Rs 13,000 crore selling almost five per cent to investors. This would be the first equity raise by the company in a decade. The company had also said it was open to inorganic growth in the affordable housing segment, and that a portion of the money to be raised would be set aside for this.
The funds aligned with the government goal of increasing the overall housing supply, including the Housing for All by 2022 initiative, HDFC said.
Commenting on the financial commitment for the funds, HDFC Chairman Deepak Parekh said: "These funds will play a significant role in achieving the Housing-for-All-by-2022 objective.”
"Affordable housing will not only act as a growth driver for the real estate industry but will also be a catalyst for the overall growth. Since lack of flexible, long-term capital is one of the key challenges facing developers, our funds will focus on providing access to financing at attractive rates and on flexible terms," he said.
With inputs from Housing News