The National Investment and Infrastructure Fund (NIIF) of India has put in Rs 660 crore ($90 million) in the second affordable housing fund of HDFC Capital Advisors Ltd.
The NIIF joins Abu Dhabi Investment Authority, the sovereign wealth fund of the Gulf emirate, as a limited partner in the HDFC Capital Affordable Real Estate–2 (H-CARE 2) fund.
Previously, H-CARE 1 had raised $450 million in 2016. The two funds provide long-term, equity and mezzanine capital to developers at the land purchase and pre-approval stage for the development of affordable and mid-income housing projects.
NIIF, an institution anchored by the Indian government, is a collaborative investment platform for international and Indian investors.
“Housing remains a critical need in India and demand for housing is expected to grow substantially with increased urbanization,” said NIIF managing director and CEO Sujoy Bose. “This demand, in conjunction with reforms implemented in the sector, creates an attractive investment opportunity for disciplined developers and knowledgeable investors.”
HDFC chairman Deepak Parekh said the lack of flexible, long-term capital is a key challenge facing developers of affordable and mid income housing in India. “This fund will help address the demand-supply gap in affordable housing and will ensure that flexible financing is provided to quality developers,” he said.
The fund is headed by industry veteran Vipul Roongta. HDFC also has a separate real estate investment platform that is run by KG Krishnamurthy.
The deal marked a rare transaction in the Indian real estate market as equity transactions where at the entity level have virtually vanished. The slow and steady return of capital with funds like HDFC Capital is a good sign for the market.
In February, HDFC Capital set up an investment platform with Mumbai-listed developer Prestige Estates Projects Ltd. The platform has a capital pool of Rs 2,500 crore.
