Residential and commercial buildings stand in the Bhendi Bazaar area of Mumbai (Photographer: Dhiraj Singh/Bloomberg)

HDFC Capital Closes $1-Billion Affordable Housing Fund

HDFC Capital Advisors, an arm of mortgage leader Housing Development Finance Corp. Ltd., has closed its second affordable housing fund, creating a $1-billion corpus, the lion's share of which is flowing in from the Abu Dhabi Investment Authority.

With the latest round of funding commitment from the Abu Dhabi sovereign fund, and those from HDFC, which is the sponsor, the fund has raised $550 million as the corpus.

The HDFC Capital Affordable Real Estate Fund-2 will be combined with the first fund raised in 2016 together creating a $1-billion corpus targeted at affordable and mid-income residential projects in  top 15 cities, HDFC said in a statement today.

The new funds will have a development footprint of 75 million square feet across affordable and mid-income residential projects in the leading 15 cities over the next two-three years.

The main objective of this fund, headed by Vipul Roongta, chief executive of HDFC Capital Advisors, is to provide long-term equity or mezzanine capital to marquee developers at the land and pre-approval stage to develop affordable and mid-income housing.

Commenting on the financial commitment for the funds, HDFC Chairman Deepak  Parekh said, “these funds will play a significant role in achieving the ‘Housing for All by 2022’ objective.

Affordable housing will not only act as a growth driver for the real estate industry but will also be a catalyst for the overall growth. Since lack of flexible, long-term capital is one of the key challenges facing developers, our funds will focus on providing access to financing at attractive rates and on flexible terms.

Deepak Parekh, Chairman, HDFC