Jerry Rao
Jerry Rao

Jerry Rao-backed VBHC looks to raise ₹300 crore to fund expansion

VBHC plans to launch a mid-income housing project at New Panvel near Mumbai ahead of Diwali

Bengaluru: VBHC Value Homes Pvt. Ltd has deferred its plan to go public and will instead raise 300 crore as the Jerry Rao-backed developer shifts from low-cost homes to mid-income housing projects.

The affordable housing firm will raise capital through a combination of debt and equity to fund expansion and make land payments, Ram Walase, managing director and CEO of VBHC Value Homes said in an interview. With investors still wary of real estate, particularly the residential sector, VBHC, which had deferred its IPO plan last year to this year, feels it’s not the right time to launch a public offering for another year and a half, Walase added.

VBHC plans to launch a mid-income housing project at New Panvel near Mumbai before Diwali, at 4500 a sq. ft, with one- and two-bedroom homes.

“We will continue to remain an affordable housing firm but the definition of affordable has changed. Earlier, it was low-cost homes but we are now coming closer to city centres with our projects. Customers today want smaller homes but in centrally located places, where there is existing infrastructure," said Walase said.

With low-cost homes not fetching enough margins and luxury homes not finding buyers, builders have found a sweet spot in mid-income housing. Though it would depend on the specific market, such homes typically cost 25-50 lakh.

It has helped that many government incentives for housing have targeted this price segment, boosting the confidence of builders and buyers alike.

VBHC has five ongoing projects and is planning to tie up land in Mumbai Metropolitan Region, Pune and Bengaluru.

“Going forward, we will focus on these markets and create depth and expand in these instead of multi-city expansion. We are also seeing opportunities of acquiring projects that are partly done, but have all approvals and the existing developers don’t want to continue," Walase said. In terms of delivery, a critical part of the real estate business today, the company will deliver 1,200 units in 2018-19.

VBHC was set up by Rao and P.S Jayakumar, former Citibank colleagues, after the former sold a majority stake in IT services firm Mphasis Corp.

They launched VBHC Value Homes in 2009 and started their first project—Vaibhava—in Bengaluru in 2010. In 2015, Jayakumar resigned from VBHC to fill up the top position in state-owned Bank of Baroda as managing director and chief executive.

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