HDFC Capital Advisors Ltd, a wholly-owned unit of HDFC Ltd, has marked the initial close for Scheme 2 of its HDFC Capital Affordable Real Estate Fund–3 (H-CARE 3) at $376 million (around Rs 3,000 crore). This is the fourth fund raised by HDFC Capital for investments in affordable housing.
A year ago, it had closed $1.88 billion of H-CARE 3, taking the Schemes 1 and 2 combined total estimated fund corpus to about $2.2 billion (including potential reinvestments). This has made H-CARE 3 one of the largest funds raised to invest in the residential real estate sector in India, the company said in a statement.
The latest fundraise has taken HDFC-3’s Scheme 1 and 2 funds combined and H - CARE 1 and 2, raised in 2016 and 2017 respectively, to create a $3.1 billion funding platform, HDFC Capital said.
The first two funds together have a corpus of over $1.1 billion targeting affordable and mid-income residential projects in India’s top 20 cities. H-CARE 3 will provide long-term, flexible equity and debt funding across the life cycle of affordable and mid-income housing projects including early-stage funding. In addition, the fund will also invest in technology companies (construction technology, fin-tech, sustainability-tech etc.) engaged in the affordable housing ecosystem. “The H-CARE 3 funds are expected to be committed towards investments over the next 3-4 years,” HDFC Capital said. “In order to achieve this objective, the company is in active discussions with leading global investors to raise additional funds to be invested in affordable housing in India,” it added.
Vipul Roongta, managing director & CEO, HDFC Capital said, “Urbanization is an irreversible trend in India which combined with the thrust given to affordable housing by the government will result in an exponential growth in the demand for affordable and mid-income homes.” The primary investor in H-CARE 3 is a wholly-owned unit of sovereign fund Abu Dhabi Investment Authority (ADIA), which bought a 10% stake in the company in May 2022.
Meanwhile, HDFC Ltd will be the sponsor and HDFC Capital will be as the investment manager for the fund.
“Our latest investment in the H-CARE platform aims to support its growth as it continues to meet the growing demand for early-stage financing of housing projects in India,” said Mohamed AlQubaisi, Executive Director of the Real Estate Department, ADIA.
Set up in 2016, HDFC Capital the three funds of H-CARE, which also has National Investment and Infrastructure Fund (NIIF) among its core investors.
“Despite the recent headwinds in the global macro landscape, I continue to be optimistic about the demand for homes in India…In India and housing will play an even more important role as a catalyst for growth. HDFC Capital has been one of the pioneers of investing in affordable and mid-income housing projects in India. With the support of leading global investors like ADIA and partnerships with trusted developers, the HDFC Capital platform is well on its way to achieve its medium-term goal of funding one million affordable homes in India,” said Deepak Parekh, chairman, HDFC Ltd.