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NIIF’s Fund of Funds has invested Rs 660 crore in HDFC’s real estate investment platform HDFC Capital Affordable Real Estate – 2 (H-CARE 2). The investment is done along with a wholly-owned subsidiary of one of NIIF’s shareholders - the Abu Dhabi Investment Authority (ADIA). This is the second investment from National Investment and Infrastructure Fund since its inception.
According to a NIIF statement, this investment 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 a strong track record.
“This investment enables investors in NIIF Fund of Funds to participate in the attractive mid-income and affordable housing sectors in India,”Sujoy Bose, MD & CEO, NIIF, said.
H-CARE 2 is one of the two real estate funds managed by HDFC Capital Advisors Ltd, a wholly owned subsidiary of HDFC Ltd. It is registered with SEBI as a Category II Alternative Investment Fund and has a corpus of Rs 4,290 crore. The fund provides mezzanine finance to developers of mid-income and affordable urban housing projects.
According to Deepak Parekh, Chairman, HDFC, 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’.
“The current lack of flexible, long-term capital is one of the key challenges facing developers of affordable and mid-income housing in India,” Parekh said, adding that the fund will help address the demand-supply gap in affordable housing and will ensure that flexible financing is provided to quality developers.
NIIF’s funds
NIIF’s Fund of Funds is one of the three funds managed by NIIF. It had been established earlier this year to invest in infrastructure projects, affordable housing opportunities and “green” projects, including those in renewable sector. The fund has received $200 million commitment from Asian Infrastructure Investment Bank (AIIB).
Fund of Funds aims to pull money from foreign and domestic investors and channel those into sector-specific platforms managed by NIIF. In April this year, the fund along with UK Government’s Department for International Development (DFID) has created the first such platform - Green Growth Equity Fund (GGEF) in which both have invested £120 million each.
NIIF also operates a Master Fund for which it has targeted raising Rs. 14,000 crore. Master Fund focuses on investments in operational assets across transportation, energy and urban infrastructure sectors. It had achieved its first closure for $1 billion with ADIA in 2016 and a second $400-million closure with Singapore’s Temasek in September this year.
According to Bose, NIIF has also set up a Strategic Fund which would focus on green field investments in the core infrastructure sectors. The latter is in the final stage of conceptualisation.
NIIF has been set up in 2015 as an Alternative Investment Fund (AIF) under SEBI regulation. It has a proposed corpus of Rs 40,000 crore out of which the Government of India will contribute 49 per cent. NIIF’s current shareholders, apart from the Government of India, are Abu Dhabi Investment Authority (ADIA), HDFC Group, ICICI Bank, Kotak Mahindra Life Insurance, Axis Bank and Temasek.
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