New Delhi, Aug. 7 -- International Finance Corporation (IFC) has committed up to $150 million as an anchor equity investor in a fund managed by HDFC Capital, the real estate private equity arm of HDFC Group, the Indian company said in a statement on Thursday.
The announcement comes nearly a year after VCCircle first reported that IFC, the private-sector investment arm of the World Bank Group, was looking to invest $150 million in the fund.
The fund-HDFC Capital Development of Real Estate Affordable and Mid-Income Fund (H-DREAM)-has a target corpus of $1 billion including a greenshoe option of $500 million. It will primarily invest in affordable and mid-income housing projects while implementing IFC's EDGE green building framework, in line with global sustainability standards, the statement said.
The fund aims to enable the development of at least 25,000 green, affordable and middle-income housing units. As per the statement, an estimated 275 million people-22% of the population-lack access to affordable housing in India. Urban housing shortfalls stand around 18 million housing units in Tier 1 and Tier 2 cities.
"For India, housing remains a social imperative and has strong multiplier effects on the economy. The HDREAM Fund integrates sustainability with financing, which will go a long way in addressing the housing gap and build resilient communities," said Deepak Parekh, non-executive chairman, HDFC Capital.
Imad N Fakhoury, regional director for South Asia at IFC, said that green affordable housing delivers a dual impact-it meets the urgent need for inclusive housing while advancing sustainability in urban development.
"IFC's investment in H-DREAM Fund is designed to demonstrate the viability of innovative financing vehicles and mobilize long-term private capital for green housing solutions," he said.
IFC estimates a potential investment opportunity of $1.4 trillion in India's green buildings market by 2030. Of this, $1.25 trillion-nearly 90 percent-will come from the residential sector.
"HDFC Capital is focused on providing early-stage financing to address supply side bottlenecks for high quality affordable and mid-income housing in India. Our endeavor is to integrate financing, facilitate energy, water and material efficiency along with innovative technology-based solutions in housing development," said Vipul Roongta, managing director and chief executive officer, HDFC Capital.
He added that the platform will channelize global and domestic capital to address the most basic social need of housing in India and that they are witnessing interest from global and domestic institutions and Indian family offices with in-principle commitments of $350 million in place already.
HDFC Capital has four SEBI-registered Category II alternative investment funds. These funds combine to create a $4.2 billion platform, targeting the development of affordable and mid-income housing in India.
Published by HT Digital Content Services with permission from VC Circle.