Financial Daily from THE HINDU group of publications
Tuesday, Oct 26, 2004
Real Estate & Construction
Money & Banking - Housing Finance
HDFC to float real estate venture funds
Mumbai , Oct. 25
THE Board of Directors of Housing Development Finance Corporation has approved the entry of HDFC into the real estate venture funds business and has given its nod for setting up two companies.
HDFC Venture Capital Ltd will undertake the business of managing the property fund, subject to approvals; HDFC Ventures Trustee Company will act as trustee to the fund, said a notice to the stock exchanges from HDFC today.
"We will be now applying to the Securities and Exchange Board of India (SEBI) for permission," Mr Conrad D'Souza, Treasurer, HDFC, has said.
These companies will probably take no more than Rs 1 crore to be set up, but the fund could be of a size of Rs 500 crore, or larger, he said.
Typically there would be growth funds, which would entail investment in property seeking to make capital gains out of it; or income funds, which would entail the Fund holding property and leasing it out for generating regular income; while a balance fund would consist of a combination of the two, he said.
"Capitalising on HDFC's wide knowledge of the Indian real estate sector and its strong relationships with various players in the sector such as developers and owners of property, both in the private and public sectors, HDFC proposes to initially set up a real estate venture fund targeted at domestic investors and at a later date set up a fund for overseas investors," said a news release from the company.
Worldwide real estate represents a substantial share of fund allocations by institutional investors, it said.
The board of directors also approved issue of 10,000 shares of Rs 10 each of Home Loans Services India Pvt Ltd (HLS) for cash at par amounting to Rs 1,00,000.
HLS undertakes the business of sale of home loans products of the Corporation. Pursuant to the said acquisition, HLS would become a wholly owned subsidiary of the Corporation.
Another board approval made was for the divestment of 44,25,000 equity shares of Rs 10 each of HDFC Securities Ltd representing 29.50 per cent of its paid-up share capital in favour of HDFC Bank Ltd. This would bring HDFC gains of around Rs 20 crore, Mr D'Souza said.
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