BackDutch VC firm Van Herk Groep to invest in Jaithirth Rao’s housing projects
Van Herk made an entity level investment of around $3 mn in Rao's Value & Budget Housing Corp. last year
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Bengaluru: Dutch venture capital firm Van Herk Groep is going to invest up to $20 million in entrepreneur Jaithirth Rao’s new service apartment business and in his value housing projects.
Van Herk made an entity level investment of around $3 million in Rao’s Value & Budget Housing Corp. Pvt. Ltd (VBHC) last year.
VBHC has nearly 18,000 homes under construction and has delivered around 3,000 homes to home-buyers. As part of some of the projects, Rao plans to build serviced apartments and make the facilities available for those families or individuals who can’t afford to buy a home.
“We are grateful to the government which has made FDI available in affordable housing projects. Van Herk’s investments in VBHC may be one of the first in affordable housing since the government announced the new FDI norms," said Rao, chairman, VBHC.
In 2014, the government relaxed foreign direct investment (FDI) norms in real estate, a move that was seen as giving a big push to affordable housing projects.
Dharmendra Chahal, consultant to the Van Herk Groep, said that the firm is a long-term investor that typically takes a 10-15 year view on a sector.
“There will be a huge demand for good quality housing and a large part of it is going to be affordable housing," he said.
Rao formed VBHC a few years back with former Citibank colleague P.S. Jayakumar. Since then, the company has raised around ₹ 360 crore from a number of investors including Carlyle Group Lp and International Finance Corp., part of the World Bank Group, ultra-rich individuals among others. Rao and Jayakumar, who is managing director at VBHC, together hold a 42% stake in the company.
The first set of 160 serviced apartments will come up in VBHC’s project in Bhiwadi, Rajasthan.
“The serviced apartments that we see today are not affordable, and there is nothing for the working class or industrial worker. We plan to build around 1000 of such apartments in the next two years," Rao said.
Apart from large-sized projects, VBHC is also looking to launch smaller projects in tier-II cities, with around 300-400 residential units in each project. One such small-sized project is being planned in Jabalpur, Rao said.
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