India’s largest private sector mortgage lender Housing Development Finance Corporation’s two wholly owned subsidiaries HDFC Property Ventures and HDFC Venture Capital have approved the plan to merge with another group subsidiary HDFC Capital Advisors.
The combined platform will advise and manage around $4.1 billion of assets and this makes it the largest real estate private equity firm in India.
The proposed scheme of amalgamation envisages merger of both the transferor companies with and into transferee company HDFC Capital Advisors and the dissolution of the transferor companies without being wound up.
The exercise is aimed at consolidating and streamlining the operations of the entities involved in the business of real estate investments ahead of the merger of the non-banking finance company HDFC with HDFC Bank.
Following the proposed amalgamation of HDFC Property Ventures with and into HDFC Capital Advisors, the shareholders of the former will be issued 1,374 shares of Rs 10 each of the latter.
Also, following the proposed amalgamation of HDFC Venture Capital with and into HDFC Capital Advisors, the shareholders of the former will be issued 638 shares of Rs 10 each of the latter.
These transactions are not expected to result in any change in the shareholding pattern of the HDFC, the NBFC said in a regulatory filing.
The proposed amalgamation is expected to result in simplification, streamlining and optimization of the group structure and efficient administration. This will also help in achieving greater efficiency in cash management and provide unfettered access to cash flow generated by the combined business, which can be deployed more efficiently, to maximize shareholder value.
Of these entities, HDFC Property Ventures provides investment advisory services, HDFC Venture Capital is an investment manager to a venture capital fund registered with SEBI, while HDFC Capital Advisors acts as an investment manager to SEBI registered alternative investment funds.
In April, HDFC entered into an agreement to sell 10% of the fully diluted paid-up share capital of HDFC Capital Advisors to an affiliate of the Abu Dhabi Investment Authority (ADIA) for around Rs 184 crore.
HDFC continues to hold the balance 90% stake post the stake sale that valued HDFC Capital at over Rs 1,840 crore. The sovereign wealth fund owned by the Emirate of Abu Dhabi is also the primary investor in the alternative investment funds managed by HDFC Capital. Globally, this is for the first time ADIA invested in a fund manager.
HDFC Capital, set up in 2016, is the investment manager to HDFC Capital Affordable Real Estate Funds 1, 2 and 3; and is aligned with the Government of India’s goal to increase housing supply and support the Pradhan Mantri Awas Yojana-‘Housing for All’’ initiative.
It manages a $3 billion funding platform that has been rated as one of the world’s largest private finance platforms focused on the development of affordable housing. The funds managed by HDFC Capital provide long-term, flexible funding across the lifecycle of affordable and mid-income housing projects including early-stage funding.
HDFC Capital’s target is to finance the development of one million affordable homes in India through a combination of innovative financing, partnerships and technology, whilst focusing on sustainability.
