Housing Development Finance Corp Ltd (HDFC), one of the top lenders in the country, plans to raise a residential real estate focused fund with a corpus of $500 million, according to a report by Reuters, citing sources. The fund is expected to hit the offshore market early next year.
HDFC Property Fund, a private equity arm set up by the bank, will mop up capital from global investors, including Singapore’s sovereign wealth fund GIC, Temasek Holdings and Oman’s State General Reserve Fund, the report said.
The fund will chase investments in southern and western India and expects to clock returns of 21 per cent over its seven-year life.
As for the strategy of the fund, it will structure the deal in a way that it has the first right on the cash flows of the project.
A slew of realty funds – both domestic and offshore – has been launched in the recent past. Improving sentiments among limited partners post the formation of the new government has become a trigger point for firms to scoop up capital.
HDFC joins a bunch of private equity firms which have either revived or launched offshore realty fund recently. Red Fort Capital, which is currently deploying capital from its second fund, will hit offshore market early next year to raise as much as $650 million.
IDFC Alternatives recently revived its offshore fund and aims to raise funds for residential realty now, against its plan to invest in commercial assets earlier.
Indiabulls Asset Management, which recently announced the launch of its maiden domestic fund, is concurrently working on an offshore fund and aims to raise Rs 1,000 crore from global investors. The fund is slated for launch in April next year.
Other funds out on the road to raise capital include Amplus Capital, ASK Group and Piramal Fund Management.
HDFC offers a range of financial services which include loans to individuals, loans to corporates, construction finance and lease rental discounting. It also operates in insurance, asset management, education finance, venture funds and banking services segments.
(Edited by Joby Puthuparampil Johnson)