HDFC Capital Advisors which is wholly owned by HDFC Limited, has embarked on the biggest such fund raising exercise in India for housing. The company has already raised a whopping $550 million for setting up its second housing fund. This will be dedicated to affordable housing which indicates the sheer popularity of this market segment in recent times. The HDFC Capital Affordable Real Estate Fund-2 or H-CARE-2 will be fused with H-CARE-1 or HDFC Capital Affordable Real Estate Fund-1. This will create a gargantuan platform of $1 billion for pumping in investments towards mid-income and affordable housing residential ventures in the top 15 cities in India.
According to experts, these funds will be driven by the mission of Housing for All by 2022 as laid down by the Indian Government. Affordable housing is expected to spur major growth for real estate in India and this will also lead to subsidiary growth of infrastructure. Developers of mid-income and affordable housing projects currently lack options with regard to adequate capital. These funds will look to help developers get financing options at really affordable rates and also with more flexible terms and conditions.
The initial close comprises the commitments guaranteed by the ADIA (Abu Dhabi Investment Authority) which is an investor along with HDFC itself. The former is the second biggest sovereign wealth fund across the globe. HDFC Capital has already pumped in $250 million across various investments out of the sum total of $450 million that it raised with the first fund last year. The platform will offer equity and long-term capital for developers at the pre-approval and land stages for coming up with mid-range and affordable residential projects. The objective is to encourage the future growth of the affordable housing sector where developers require access to capital in the early stages.