News: HDFC Capital, L&T Realty in talks to set up Rs 4,000-crore investment, development platform-04-04-2022
The joint platform to be structured as an Alternative Investment Fund (AIF) and will invest in mid-market residential projects across the country.
Mortgage lender Housing Development Finance Corporatio n’s (HDFC) private equity real estate arm HDFC Capital Advisors and engineerin g major Larsen & Toubro’s property development company L&T Realty are in advanced talks to set up a Rs 4,000 crore residential development and investment platform, persons with direct knowledge of the development, said.
The joint platform to be structured as an Alternative Investment Fund (AIF) and will invest in mid-market residential projects across the country.
Both HDFC Capital Advisors and L&T Realty will be infusing equity into this platform and the developer will be responsible for execution of the projects in which the joint entity will be making investments.
“The discussion is at an advanced stage and a call on quantum of respective equity infusion by both HDFC Capital and L&T Realty is likely to be taken soon,” said one of the persons mentioned above.
The investment platform will be raising the fund from markets after factoring the exact equity infusion by HDFC Capital and L&T Realty.
ET has already reported HDFC Capital’s plan to invest around $2 billion in affordable housing, having secured the first close for a fund that’s one of the world’s largest for residential property investments.
The fund, HDFC Capital Affordable Real Estate Fund - 3 (H-CARE-3), had already garnered $1.22 billion by midJanuary, with the primary investor being a wholly owned unit of the Abu Dhabi Investment Authority (ADIA). The total corpus of the H-CARE-3 will be close to $2 billion, including potential reinvestments.
H-CARE-3 is the third fund raised from HDFC Capital. The funds raised so far--HDFC Capital Affordable Real Estate Funds – 1 & 2 - raised in 2016 and 2017 totalled $3 billion.
Through these funds, it has formed joint ventures, alliances and has invested in developers including Runwal Group, Rustomjee Group, Shapoorji Pallonji Real Estate, Prestige Group, Arvind Smart Spaces and Ambuja Neotia. ET’s email queries to HDFC Capital and L&T Realty remained unanswered until the time of going to press.
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 focusing on sustainability.
The funds raised from H-CARE 3 will be committed toward investments over the next 4-5 years with a projected development footprint estimated at 280 million square feet across affordable and mid-income residential projects in India’s leading cities.
Primary focus of these funds will be to provide 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.
Established in 2011, L&T Realty is the real estate arm of the $21 billion Larsen and Toubro and holds an extensive portfolio spanning 70 million sq ft across residential, commercial and retail developments. The company is currently present in key cities including Mumbai, Navi Mumbai, Chennai, Bangalore, National Capital Region and Hyderabad.
HDFC Capital, set up in 2016, is aligned with the government of India’s goal to increase housing supply and support the Pradhan Mantri Awas Yojana – or the ‘Housing for All’ initiative.
