HDFC Property Fund plans to raise Rs 2,400 crore in an offshore fund
Post the budget session, one can witness a lot of action in the real estate sector. HDFC Property Fund ‘s (the real estate investment arm of the HDFC Group) decision to invest Rs 700 crore in four residential projects coming up in NCR, Pune and Bangalore is also in sync with that action.
A total of 7,000 housing units will be built across these projects and the expected turnover from these units is Rs 3,700 crore. This investment will be made out of its second offshore fund. A fortnight ago its final close at $250 million or Rs 1,500 crore was announced by HDFC Property Fund.The fundraising exercise for the fund was concluded with investments from renowned international institutional investors.
Out of this fund Rs. 700 crore will be used in the four middle-income and affordable housing projects, and the developers are already chosen for those projects. They are Mahgun India developer in NCR’s Greater Noida area, Paranjape Schemes in Pune, and Sterling Developers and Vrindavan Tech Village owned by Embassy Property Developments in Bangalore.
Mahhagun’s Greater Noida property would be spread across 8-lakh square feet and will involve an investment of Rs 180 crore from the fund. Rs 200 crore will be invested in Paranjape’s 40-lakh square feet project in Pune. Rs 220 crore from the fund will be utilised on the Vrindavan Tech Village which is spread across 43-lakh square feet. The Sterling project will see an investment of Rs 70 crore for the development of 5-lakh square feet.
The fund is expecting an Internal Rate of Return of 23 % and will be exiting when the projects reach a stabilisation stage at the end of four years in 2018. The entire tenure of the fund would be around 8 to 9 years.
The good news is that the first tranche of the second offshore fund of Rs 1,500 crore has already been raised. The company plans to raise an additional Rs 900crore taking the total planned fund corpus to Rs 2,400 crore.
Source- The Hindu Business Line
Bangalore, HDFC Group, HDFC Property Fund, NCR, Pune, real estate investment arm, Vrindavan Tech Village
