New Delhi, April 14 -- HDFC Capital Advisors Ltd, the real estate private equity arm of HDFC Bank, has created a Rs 1,500-crore (about $175 million) development platform with a unit of New Delhi-based developer Eldeco Group to develop residential projects in tier 2 and 3 cities.
The partnership is part of HDFC Capital's strategy to develop affordable and mid-income housing, the PE firm said. Neither the PE firm nor Eldeco specified their respective capital commitment to the platform.
"We are bullish on the potential of tier 2 and tier 3 towns situated within a 300-kilometer radius of major metropolitan areas," said Vipul Roongta, the managing director and chief executive of HDFC Capital.
The platform will target the development of 18 projects across towns including Panipat and Sonipat in Haryana, Rudrapur and Rishikesh in Uttarakhand, Ludhiana in Punjab, and Kasauli in Himachal Pradesh. The projects will have a total development area of over 10 million square feet and combined revenue potential of about Rs 11,000 crore.
"This investment allows us to accelerate our expansion into high-growth markets that are increasingly being connected to India's economic centers," said Pankaj Bajaj, the chairman and MD of Eldeco Group, which is investing in the platform via its unlisted arm Eldeco Infrastructure & Properties Ltd.
HDFC Capital and Eldeco Group have partnered earlier, too. Last April, the PE investor pumped about Rs 350 crore into a joint platform with Eldeco in its third round of investment, taking the total capital infusion to about Rs 850 crore. The PE investor invested a similar amount in the platform in September 2022 out of the first scheme of its HDFC Capital Affordable Real Estate Fund - 3 (HCARE-3). In 2021, it had invested Rs 150 crore out of its first fund, HCARE-1, to back the development of low-rise and plotted development projects in tier-II cities and the national capital region.
HDFC Capital marked the first close of Scheme 2 of HCARE-3 last January at $376 million, taking the cumulative value of both Scheme 1 and 2 to about $3 billion as the first scheme garnered about $1.88 billion from investors. Per the latest update, HDFC Capital has built a $4.2-billion platform across four investment vehicles and has garnered investment from the National Infrastructure Investment Fund (NIIF) and Abu Dhabi Investment Authority (ADIA).
Last August, VCCircle reported that HDFC Capital was raising capital for a new vehicle, HDFC Capital Development of Real Estate Affordable and Mid-Income Fund - 1 (HDFC DREAM Fund), a category-II alternative investment fund with a target corpus of $500 million and a greenshoe option of an equal size.
Eldeco Group, based in New Delhi, has developed residential projects across key markets in North India in states including Uttarakhand, Uttar Pradesh, Punjab, among others. The developer has, so far, delivered over 200 projects with an aggregate area of about 60 million square feet.
Published by HT Digital Content Services with permission from VC Circle.