HDFC Capital Advisors, the wholly-owned private equity arm of India’s largest mortgage lender, has invested Rs 375 crore in realty developer Runwal Group’s mid-income and affordable housing project Runwal Avenue in Mumbai’s eastern suburb of Kanjur Marg.
The fund has made this investment though a mezzanine equity structure. Around Rs 210 crore of this amount will be utilised to provide complete exit to Piramal Capital, existing lender of the project, while balance will support construction of the project.
Runwal Avenue is a greenfield project spread over a total 6 acres with total potential of 1.7 million sq ft saleable space development. Piramal Fund Management had invested in the project at the land acquisition stage and is now exiting the investment.
The developer had recently pre-launched the project in mid-December and has achieved sales of over 150 apartments. The project offers apartments configurations of up to 3 bedrooms priced in the range of Rs 1 crore to Rs 1.5 crore. The project is expected to be completed in four years from now.
“This is HDFC Capital Advisor’s fourth investment in our projects and we have managed to perform well in earlier projects too with their support and provided them exits ahead of schedule. We look forward to building this relationship further,” Subodh Runwal, Director, Runwal Group, told ET, while confirming the development.
ET’s email queries to HDFC Capital and Piramal Capital remained unanswered until the time of going to press.
In the first and rare exit achieved by any institutional investors in 2020, HDFC Capital Advisors had made an ahead of schedule 50% exit from its total Rs 500 crore investment in Runwal Group’s 115-acre township project Runwal Gardens in Dombivli near Mumbai in October.
The exit assumed significance not only because of ongoing liquidity squeeze but also given that the fund had made the investment just 18 months ago and has exited three years prior to scheduled exit primarily on the high velocity in the affordable segment.
HDFC Capital Advisors has made this new investment in Runwal Avenue through its affordable and mid-income housing investment platform HDFC Capital Affordable Real Estate (H-CARE) that counts Abu Dhabi Investment Authority, the sovereign wealth fund of the Gulf emirate, and India’s sovereign fund, the National Investment & Infrastructure Fund, as principal investors.
The investment also underlines that liquidity is available for developers with established track record and for right-priced products.
HCARE, set up in 2017, is now one of the largest residential funds in mid income and affordable housing space and has committed more than Rs 7,000 crore across over 25 investments in affordable housing projects in India.
HDFC Capital runs one of the largest institutional funds in the residential housing segment and has raised over $1.25 billion through two of its funds H-CARE 1 and H-CARE 2.
The primary objective of this platform is to provide long term, equity and mezzanine capital, to developers with execution track record, at the land and pre-approval stage for the development of affordable and mid-income housing in India.
It is aiming to push established grade A developers towards affordable and mid-income housing projects as this will ensure not only increased supply but also support the much-needed quality of construction.
