HDFC and NIIF’s new partnership in an investment platform! What is so special about it?

The National Investment and Infrastructure Fund (NIIF) of India has announced an investment of Rs 6.6 billion in HDFC capital affordable real estate 2 (H-CARE 2), an investment platform, managed by HDFC Capital Advisors, a wholly owned subsidiary of HDFC. The agreement, which marks the second investment for NIIF’s fund of funds, will see NIIF join a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA) as an investor in H-CARE 2. NIIF’s investment in H-CARE 2 demonstrates the role that NIIF’s Fund of Funds can play in the infrastructure and associated sectors in India by anchoring and investing with fund managers with strong track record. H-CARE 2 is structured as a category two alternative investment fund, with a corpus of Rs 42.9 billion. The fund provides mezzanine finance to developers of mid-income and affordable urban housing projects. Sujoy Bose, Managing Director and CEO, NIIF, said: “Housing remains a critical need in India and the demand for housing is expected to grow substantially with increased urbanization.” This demand, in conjunction with reforms implemented in the sector creates an attractive investment opportunity for disciplined developers and knowledgeable investors. NIIF is excited to partner with HDFC to invest into this sizable opportunity. “This investment enables investors in the NIIF Fund of Funds to participate in the attractive mid income and affordable housing sector in India,” he further added. Deepak Parekh, Chairman, HDFC stated, “H-CARE 2 now has a wider platform targeting affordable and mid-income residential projects in India and will play a significant role in progressing towards the government’s flagship programme, ‘Housing for All’ by 2022. Our partnership with NIIF is also recognition that housing is a catalyst for GDP growth.” The current lack of flexible, long-term capital is one of the key challenges facing developers of affordable and mid income housing in India. This fund will help address the demand-supply gap in affordable housing and will ensure that flexible financing is provided to quality developers.