HDFC Fund may invest Rs 350 crore in 3 Ahuja Projects

MUMBAI: HDFC Capital Affordable Real Estate Fund is close to investing Rs 350 crore in three projects of a Mumbai-based real estate developer, people close to the development said. HDFC launched the $400-million fund to invest in mid-tier housing projects earlier this year.
The fund will pick up a 20% stake in each of the Ahuja Constructions projects. “The investment would be at the special purpose vehicle level,“ said one of the people cited above. The projects are located in Malad in Mumbai and two outside the city at Vasind and Palgarh. The deal is set to be concluded within a week, said the people.

This will be the first major investment for the Vipul Roongta-headed fund, which closed in January. HDFC Capital was appointed investment manager for the fund, which is registered as an alternate investment fund sponsored by HDFC. It fund will have a long-term view with an investment cycle of 12 years.

Piramal Fund Management, the real estate investment arm of the Piramal group, invested about Rs 100 crore in another Ahuja Constructions project in September. There was no response to questions emailed to Roongta and Ahuja Constructions on Wednesday.

Investors have flocked to the affordable housing segment after the government's budget push. “While the returns in the affordable housing projects are a tad lower than other projects, there is a certainty that the investors would make returns,“ said the person cited above.

Real estate developers are increasingly looking at private equity, as bank funding dries up. The latter, coupled with worries about the new Real Estate (Regulation and Development) Act, has made real estate developers and lenders nervous, experts said.