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HDFC’s affordable housing fund hits first close with $405M

08 January, 2016

India’s largest mortgage lender HDFC Ltd has raised Rs 2,700 ($405 million) to mark first close of its new fund aimed at backing mid-income housing projects across the country, as per a stock market disclosure.

The firm said the fund has a target corpus of Rs 5,000 crore (about $758 million) to invest in long-term equity of mid-income housing. This would make it arguably the 

single-biggest real estate focused private equity fund in the country.

The fund has been christened as HDFC Capital Affordable Real Estate Fund-1 (HCARE-1) and HDFC Capital Advisors Ltd, a wholly owned subsidiary of HDFC, has been appointed as the investment manager for the fund.

It will have a tenure of 12 years. HCARE-1 is a SEBI-registered Alternative Investment Fund (AIF) and been sponsored by HDFC.

VCCircle had first reported last June that HDFC is raising a large long-term realty investment fund. Unlike typical private equity funds, which have a holding period of four-five years, it will stay invested for a longer horizon of 10-12 years, a source had said back then.

Led by Vipul Roongta, senior portfolio manager, real estate, HDFC AMC, the fund had hit the offshore market last year.

This fund is being raised under HDFC PMS which is separate from HDFC Property Fund, the real estate private equity arm of HDFC. The private equity arm is separately raising a $500 million corpus from offshore markets for residential real estate.

HDFC offers financial services which include loans to individuals and corporate as well as construction finance and lease rental discounting. It also operates in insurance, asset management, education finance, venture funds and banking services segments.

On Monday, shares of the company were trading at Rs 1,172.10 each, down 0.65 per cent at 11:45 AM on the BSE in a strong Mumbai market.

Another firm that is looking at a mega realty fund is Mumbai-based Edelweiss. Its asset management unit is aiming to up to $1 billion for its first residential real estate fund.

Several realty fund houses are on the road to raise fresh corpus but most are targeting $500 million size. Earlier, Red Fort Capital was believed to be looking at a similar corpus for a new fund, but the firm’s co-founders recently split and the focus is now on generating exits.


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HDFC’s affordable housing fund hits first close with $405M

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