H-CARE 3 funds to invest in affordable housing

This is an initial close and there is room for more money coming into the corpus, as it received a commitment by the Affordable Real Estate Fund 3 H-CARE 3 sponsor Housing Development Corporation HDFC and the Abu Dhabi Investment Authority ADIA In technical parlance. Returns from investments are to be ploughed back into the fund, which has a life between 12 and 14 years.

With potential reinvestments, the total corpus increases to an estimated $1.88 billion in funds focused on the segment.

Four-five prospective investors are in talks to infuse more into the corpus. The fund-raising process is expected to complete by the end of the year 2022, according to banking sources.

The platform is well on its way in ensuring that more Indians become homeowners thanks to the support of marquee global investors like ADIA and partnerships with leading developers, said Deepak Parekh, chairman, HDFC.

HDFC Capital, a wholly-owned subsidiary of HDFC, was set up in 2016 to support the Centre's goal to increase housing supply and support the Pradhan Mantri Awas Yojana — Housing for All initiative.

HDFC is the sponsor of the fund and ADIA is the primary investor.

H-CARE 3 combines HDFC Capital's Affordable Real Estate Funds 1 2, raised in 2016 and 2017 to create a $3 billion funding platform.

The fund is focused on providing long-term, flexible debt across the life cycle of real estate projects, including land, approval and last-mile funding for affordable and middle-income housing across India.

The H-CARE 3 fund is expected to be committed to investments over the next four-five years. Equity funding is something that the fund can provide for real estate projects. It will invest in tech companies like construction technology, fintech and clean-tech that address the needs of the ecosystem.

ADIA said that H-CARE 3 presents a chance to grow ADIA's relationship with HDFC and is a result of the executive director of the real estate infrastructure department, Khadem AlRemeithi.

This builds on the success of previous H-CARE funds, which have supported the development of new mid-market housing projects across the country.

ADIA is a key investor in two funds managed by HDFC Capital.

The projected development footprint is estimated to be 280 million square feet. This is a community of affordable and middle-income residential projects in leading cities of the country.