Japanese realty firm Daiwa invests in VBHC

Bengaluru: Japanese real estate conglomerate Daiwa House Industry Co. Ltd has made a strategic minority equity investment in realty firm VBHC Value Homes Pvt. Ltd, marking its first investment in the affordable housing sector in India.

Daiwa House, which develops residential properties, commercial office buildings, smart towns, rental housing, stores, logistical facilities and eco-friendly buildings, has come on board as a strategic investor, partnering VBHC to construct a pipeline of projects.

While both the parties refused to disclose the amount of investment, they said the funds raised would be used to expand VBHC’s project portfolio.

Equirus Capital Pvt. Ltd was the advisor in the transaction.

“We are happy to partner with Daiwa House, one of the largest home builders in Japan, which will help VBHC achieve its next scale of growth through its expertise,” said Jaithirth Rao, chairman, VBHC.

“Partnership with VBHC is part of our business strategy to expand our global operations. And their corporate philosophy of providing affordable housing for all is an ideal fit with ours,” a Daiwa House spokesperson said in a statement.

On 14 September, Mint reported that VBHC was in talks with private equity firms Tano Capital and Ambit Corporate Finance to raise funds.

VBHC has always followed a “manufacturing” approach to construction to ensure quality and speed at lower costs by using standardized or modular design.

Rao said Daiwa House’s expertise in construction will help the company achieve greater scale and quality.

VBHC is backed by a number of institutional investors such as global private equity fund Carlyle Group and International Finance Corp., part of the World Bank Group, among others.

In June, Dutch venture capital firm Van Herk Groep said it will invest up to $20 million in the company’s new service apartment business and value housing projects.

In 2014, Van Herk made an investment of around $3 million in VBHC.

“The investment is a testimony to the growing private sector interest in the affordable housing space in India post the announcement of the government’s ambitious ‘Housing for all by 2022’ initiative,” said Ajay Garg, managing director of Equirus Capital.