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HDFC Capital announces initial close at $1.88 bn for its affordable housing fund

H-CARE 3 is one of the largest funds raised to invest in the residential real estate sector in India. Mint  (Ramesh Pathania/Mint)Premium
H-CARE 3 is one of the largest funds raised to invest in the residential real estate sector in India. Mint  (Ramesh Pathania/Mint)

  • The primary investor in H-CARE 3 is a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA).
  • H-CARE 3 combines with the HDFC Capital Affordable Real Estate Funds – 1 & 2, raised in 2016 and 2017, respectively, to create a $3 billion funding platform.

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New Delhi: HDFC Capital, a wholly-owned subsidiary of HDFC Ltd and acting as an investment manager, has successfully achieved the initial close of its third fund focused on affordable housing, the HDFC Capital Affordable Real Estate Fund – 3 (H-CARE-3), according to the press release.

H-CARE 3 is one of the largest funds raised to invest in the residential real estate sector in India, with investors committing in excess of $1.22 billion towards the first close- which combined with potential reinvestments by the fund- creates an estimated total fund corpus of $1.88 billion. The primary investor in H-CARE 3 is a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

Set up in 2016, HDFC Capital is aligned with the Government of India’s goal to increase housing supply and support the Pradhan Mantri Awas Yojana - ‘Housing for All’ initiative. H-CARE 3 combines with the HDFC Capital Affordable Real Estate Funds – 1 & 2, raised in 2016 and 2017 respectively, to create a $3 billion funding platform which has recently been rated as one of the world’s largest private finance platforms focused on the development of affordable housing.

H-CARE 3 will provide long-term, flexible funding across the lifecycle of affordable and mid-income housing projects including early-stage funding. In addition, H-CARE 3 will also invest in technology companies (construction technology, fin-tech, clean-tech etc.) 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 affordable housing in India.

Deepak Parekh, Chairman – HDFC Ltd, said, “In India, housing will play an even more important role as a catalyst for growth with increased demand for affordable and mid-income housing. Combined with India’s growth prospects, I have never been as optimistic about the housing sector as I am today. HDFC Capital has been one of the pioneers of investing in affordable and mid-income housing projects in India. With support from marquee global investors like ADIA and partnerships with leading developers, the platform is well on its way to ensuring many more Indians become homeowners."

H-CARE 3 Overview

HDFC Ltd will be the Sponsor and HDFC Capital will be the investment manager for H-CARE 3.

Investors and Sponsors have committed $1.22 billion to H-CARE 3. Combined with potential reinvestments, the total fund corpus increases to an estimated $1.88 billion.

Primary focus on providing long-term, flexible debt across the lifecycle of real estate projects (including land, approval and last-mile funding) for the development of affordable and mid-income housing across India.

H-CARE 3 has the flexibility to provide equity funding for real estate projects and invest in tech companies (construction technology, fin-tech, clean-tech etc) that address the needs of the affordable housing ecosystem.

The H-CARE 3 funds are expected to be committed towards investments over the next 4-5 years.

H-CARE 3's projected development foot-print is estimated to be 280 million sq ft across affordable and mid-income residential projects in India’s leading cities (across the country).

Khadem Al Remeithi, Executive Director, Real Estate and 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 mid-market housing projects across the country, in alignment with Indian government priorities."

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