HDFC Capital raises $1.88 bn for its third fund focused on Affordable Housing

24 Jan 2022 , 10:07 AM

HDFC Capital Advisors Limited (HDFC Capital), HDFC’s significant arm and investment manager, has announced that the company has achieved the initial close of its third fund focused on affordable housing, the HDFC Capital Affordable Real Estate Fund — 3 (H-CARE-3). H-CARE 3 is among the largest funds raised to invest in the residential real estate sector in India, under which investors committed over $1.22 billion towards its first close, resulting in an estimated total corpus of $1.88 billion. A wholly-owned subsidiary of Abu Dhabi Investment Authority is the major investor in H-CARE 3.

H-CARE 3 aims to provide long-term, flexible funding across the lifecycle of affordable and mid-incoming housing projects, including early-stage funding. In addition, H-CARE 3 will also invest in technology companies primarily engaged in the affordable housing ecosystem.

HDFC Capital aims to finance the development/construction of one million affordable homes in India through a combination of technology, innovative financing, and partnership on the back of sustainability. To facilitate its objective, the company is in active discussions with various leading global investors to raise additional financing to be invested in the company’s affordable housing project in India.

Mr. Khadem AlRemeithi, Executive Director of the Real Estate & Infrastructure Department, ADIA, said, “H-CARE 3 presents the opportunity to grow our existing relationship with HDFC while continuing to address the significant demand for affordable housing in India. This builds on the success of previous H-CARE funds, which have supported the development of new midmarket housing projects across the country, in alignment with Indian government priorities.”

H-CARE 3 will be sponsored by HDFC Ltd, whilst HDFC Capital will be its investment manager. Both the investor and sponsor have committed a corpus of US$1.22 bn to H-CARE 3, increasing the total fund corpus to an estimated $1.88 bn. H-CARE 3’s primary focus will be on providing long-term, flexible debt across the lifecycle of real estate projects (including land, approval, and final funding) for the development of affordable housing across India.

H-CARE 3 has the flexibility to make an investment in tech companies that focuses on the needs of the affordable housing ecosystem and provide equity funding for real estate projects. The funds raised through H-CARE 3 are expected to be committed towards investment over the upcoming 4-5 years.

H-CARE 3 estimates to develop affordable and mid-income residential projects in 280 million sq. ft. area across India’s leading cities.

HDFC Capital was established in 2016, specifically aligned with the Government of India’s objective to increase housing supply and to back the Pradhan Mantri Awas Yojana — ‘Housing for All’ initiative. H-CARE 3 strives to create a $3billion funding platform, combining the funding raised in 2016 and 2017 through HDFC Capital Affordable Real Estate Funds — 1 & 2.