India’s largest private mortgage lender Housing Development Finance Corporation (HDFC) has entered into an agreement to sell 10% of the fully diluted paid-up share capital of its wholly-owned subsidiary HDFC Capital Advisors to an affiliate of the Abu Dhabi Investment Authority (ADIA) for around Rs 184 crores.
HDFC will continue to hold the balance 90% stake post the stake sale that values the private equity real estate firm at over Rs 1,840 crore. The sovereign wealth fund owned by the Emirate of Abu Dhabi is also the primary investor in the alternative investment funds managed by HDFC Capital.
HDFC Capital, set up in 2016, is the investment manager to HDFC Capital Affordable Real Estate Funds 1, 2 and 3; and is aligned with the Government of India’s goal to increase housing supply and support the Pradhan Mantri Awas Yojana – ‘Housing for All’ initiative.
“Six years ago, we set up HDFC Capital with a vision of progressing in sync with the government’s ‘Housing for All’ goal by increasing the supply of affordable homes in India. Supported by marquee global investors like ADIA, the funds managed by HDFC Capital have grown to create one of the world’s largest private financing platforms for the development of affordable housing,” said Deepak Parekh, Chairman, HDFC.
According to Parekh, this investment by ADIA will enable HDFC Capital to leverage the sovereign fund’s global expertise and experience to further propel HDFC Capital towards becoming a leading investment platform for global and local investors across multiple strategies and asset classes in the real estate and technology ecosystem.
HDFC Capital manages a $3 billion funding platform that has recently been rated as one of the world’s largest private finance platforms focused on development of affordable housing.
“HDFC Capital is one of India’s leading providers of affordable housing project finance, with an established track record of supporting the development of new residential stock across the country. This agreement builds on our successful investments in the H-CARE funds and underlines our belief in the positive long-term outlook for affordable and mid-market housing in India,” said Mohamed AlQubaisi, Executive Director of the Real Estate Department, ADIA
The funds managed by HDFC Capital provide long-term, flexible funding across the lifecycle of affordable and mid-income housing projects including early-stage funding. In addition, the funds will also invest in technology companies including construction technology, fin-tech, clean-tech etc., which are engaged in the affordable housing ecosystem.
HDFC Capital’s target is to finance the development of one million affordable homes in India through a combination of innovative financing, partnerships and technology, whilst focusing on sustainability. In order to achieve this objective, the company is in active discussions with leading global investors to raise additional funds to be invested in development of affordable & mid-income housing projects in India.
The need for affordable housing is growing across the urban sprawls of India and has caught the attention of many developers and financial institutions. More than half of all Indian residential launches in the top eight cities in the last five years have been in the sub-Rs 50 lakh segment.
In recent years, the government has also introduced several schemes for affordable housing including interest subsidies for low and economically disadvantaged sections, additional tax benefits for both developers and homebuyers and has also granted infrastructure status to affordable housing to ease fund availability.