HDFC Capital Raises USD 1.8-billion From ADIA & Others For Its Affordable Housing Fund-3

The HDFC Capital Affordable Real Estate Fund-3 (H-CARE-3) is one of the largest funds formed in India to invest in residential real estate, with investors pledging more than USD 1.22 billion toward the first closing of the first tranche.

HDFC Capital announced the launch of its third low-cost housing fund, HDFC Capital Affordable Real Estate Fund-3 (H-CARE-3), with a $1.8 billion investment from investors Housing Development Finance Corporation (HDFC) and Abu Dhabi Investment Authority (ADIA).

This includes a USD 1.2 billion upfront investment and an extra $600 million in principle reinvestment, the business said in a statement. This is a preliminary close in technical terms, suggesting that there is still room for money to enter the corpus. The fund's earnings will be reinvested in the fund, which will have a 12- to 14-year life.

Increasing Investment Corpus

Additionally, HDFC Capital is in discussions with four to five potential investors on the possibility of raising its investment in the corpus. According to certain financial sources, the fund-raising effort would culminate in the first half of the calendar year 2022. Deepak Parekh, chairman of HDFC, remarked that the platform is well on its way to ensuring that many more Indians become homeowners, with support from prominent global investors such as ADIA and relationships with significant developers.

The HDFC Capital Affordable Real Estate Fund 3 would provide long-term financing for the building of more than 280 million square feet of affordable and middle-income homes across India. 

Low Cost Housing Digital Start-ups

Additionally, the business stated that it will invest in low-cost housing-related digital startups. HDFC Capital, a subsidiary of lender Housing Creation and Finance Corporation (HDFC) Ltd, aims to support the development of one million affordable houses in India over the long term. The contributions support Prime Minister Narendra Modi's project "Housing for All." The Pradhan Mantri Awas Yojana presents a chance to expand the country's housing supply.

Need For Affordable Homes In India

HDFC Capital has a $3 billion fundraising platform, which comprises its first two funds, both of which ADIA participated in, making it one of the largest affordable housing funds in the world. According to Khadem AlRemeithi, ADIA's executive director of real estate and infrastructure, this fund combines the benefits of earlier funds while also addressing India's massive need for affordable homes.

Way Forward

HDFC Ltd will sponsor H-CARE 3, with HDFC Capital acting as investment manager. 

HDFC Capital, launched in 2016, also handles H-CARE 1 & 2, which have a total capital commitment of more than $1.1 billion and are focused on low and middle-income residential projects throughout India's top 20 cities. The National Investment and Infrastructure Fund (NIIF) is a significant investor in the H-CARE funds.