India’s largest mortgage lender HDFC’s wholly-owned subsidiary HDFCNSE -0.07 % Capital Advisors has acquired a minority stake in realty developer ATS Group’s compny HomeKraft for an undisclosed amount.
HomeKraft, ATS’ newly formed entity, will be investing over $300 million for development of affordable and mid-income housing across India with a mix of internal accruals, debt and private equity funds, the company said in a release.
The investment by HDFC Capital Affordable Real Estate Fund, a fund managed by HDFC Capital Advisors, in HomeKraft is one of the rare entity level equity investments in the real estate sector.
“The affordable housing segment is expected to see healthy growth going forward given the impetus provided by the government through various incentives and subvention scheme…Our funds will provide flexible financing to HomeKraft to meet its capital requirements and address the demand-supply gap in affordable housing in India,” said Renu Sud Karnad, MD, HDFC Ltd.
In December last year, HDFC Capital Advisors Ltd, achieved the initial close of its second affordable housing fund, the HDFC Capital Affordable Real Estate Fund – 2 (H-CARE-2). This will be combined with the HDFC Capital Affordable Real Estate Fund – 1 (H-CARE-1) raised in 2016 to create a US$1 billion platform targeting affordable and mid-income residential projects in India’s leading 15 cities.
The primary objective of this platform is to provide long term, equity and mezzanine capital to marquee developers at the land and pre-approval stage for the development of affordable and mid-income housing in India.
HomeKraft is looking to clock sales of 6,000-6,500 units in the next 3-5 years with expected revenue in the range of $600-750 million.
Projects under HomeKraft would be in the range of Rs 30-70 lakhs; beginning with projects in NCR followed by rest of India. All apartments under this brand, would qualify under the PMAY scheme, wherein, various concessional government schemes like interest subvention under CLSS, concessions on GST, etc. would be available. All these benefits would pass on to the customer basis their respective eligibility, which would further reduce the cost of the apartment.
