HDFC Capital Advisors

Funds managed

    Fund name    Asset Class      License
    HDFC Capital Affordable Real Estate Fund -1  Real Estate    SEBI AIF Cat 2
    HDFC Capital Affordable Real Estate Fund -2  Real Estate    SEBI AIF Cat 2

HDFC Capital Affordable Real Estate Fund 1 (HCARE-1) and HDFC Capital Affordable Real Estate Fund 2 (HCARE-2), are SEBI registered Category II Alternative Investment Funds. They combine as a ~USD 1.1 billion platform dedicated to the supply of affordable housing.

These funds have objectives of providing the quality urban infrastructure as well as a growth driver for the real estate industry in India. The HCARE series of funds partner with developers to focus on long term financing solutions, across the capital stack of debt and equity, for affordable and mid-income housing.

About

HDFC Capital Advisors Limited, a real estate private equity investment manager, was established in 2015 as a 100% subsidiary of HDFC Ltd. They specialize in providing long term debt and equity financing for the development of housing projects from the funds that They manage and have emerged as one of the largest alternative investment fund managers in the country.

Vision

A for-profit global impact platform to sustainably address the needs of the affordable / social housing ecosystem for all stakeholders through a combination of knowledge accumulation, innovative financing, partnerships and technology.

Focus

They seek to address the supply gap in affordable housing in India through their mission of “Path to a Million Homes”. They believe they can achieve this with their sharp focus on Financing, Partnership, Technology, ESG and Impact.

They are driven by the Government’s urban housing mission, “Housing for All”, which seeks to provide 20 million homes across India, primarily for the economically weaker section and low-income groups. They believe that their funds together with their partnerships can create an eco-system for responsible investing and deliver a positive social impact.

Journey

Key staff

Advisory Board

Deepak Parekh (Chairman, HDFC Ltd.) – He joined HDFC’s senior management in 1978 and was inducted as a Full-time Director of HDFC in 1985. Subsequently, he was appointed as the Managing Director of HDFC (designated as Chairman) in 1993 and manages HDFC Asset Management, HDFC Standard Life Insurance Co and HDFC Ergo General Insurance Co. He retired as the Managing Director, on 31 December 2009. He was appointed as a Director of HDFC, liable to retire by rotation, by the shareholders of HDFC at its AGM held on 14 July, 2010. He is a director on the boards of prominent companies in India. In the past, he has worked at Ernst & YoungGrind lays Bank, and Chase Manhattan Bank as its assistant representative for South Asia. He had played a key role as Special Director on the Satyam Board in 2009 to revive the company and a crucial role during the restructuring of UTI in the late 90’s, which helped regain investors’ confidence. He’s also a recipient of Padma Bhushan award in 2006. 

Keki Mistry (Vice Chairman and CEO, HDFC Ltd.) – He joined HDFC in 1981. Over the years he held several responsibilities, prior to being inducted onto its board as an executive director in 1993. He was appointed as the managing director in 2000, as the vice chairman & Managing director in October 2007 and the vice chairman & chief executive officer of the corporation with the effect from Jan 1, 2010. He’s responsible for the overall functioning of the HDFC. He’s also on the board of Torrent Power limited, CDC Group (London), Greatship (India) Ltd, Griha Investments – Mauritius, Griha Investments Pte Ltd – Singapore. He’s also non-executive chairman of GRUH Finance Ltd, and also advisory of few Indian corporates. Prior joining HDFC, He started his career with AF Ferguson & Co as an accountant in 1975 and followed by short stints with Hindustan Unilever ltd and Indian hotels companies ltd. 

Renu Sud Karnad (Managing Director, HDFC Ltd.) – She joined HDFC Ltd. in 1978. She was inducted onto its Board as Executive Director in 2000. She grew to become Joint Managing Director in 2007 and has been elevated to the post of Managing Director with effect from January 1, 2010. Besides being on the Board of several HDFC Group Companies, she is on the boards of ABB Ltd, Bosch Ltd, Feedback Ventures Limited, Indraprastha Medical Corporation Ltd, Maruti Suzuki India and international board of WNS. She was featured in the list of ’25 top non-banking women in finance’ by U.S. Banker magazine, listed by Wall Street Journal Asia as among the ‘Top Ten Powerful Women to Watch Out for in Asia’. “Outstanding, Woman Business Leader” by CNBC-TV18, 25 Most Influential Women Professionals in India by India Today.

V. Srinivasa Rangan (Executive Director, HDFC Ltd.) – He joined HDFC as a Senior General Manager – Treasury and has been executive director since 1986. He is also on the boards of several HDFC group companies: HDFC Investments Limited, HDFC Trustee Company Limited, HDFC Property Ventures Limited, HDFC Credila Financial Services Pvt Ltd., HDFC Education & Development Services Private Limited., H T Parekh Foundation. Apart from HDFC group of companies he is also on the boards of Atul Limited, True North Corporate Private limited, Cholamandalam Investment and Finance Company Ltd., TVS Credit Services Ltd., Computer Age Management Services Private Ltd. He’s also a member of RBI’s Committee on Asset Securitisation and Mortgage Backed Securitisation, Technical Group formed by National Housing Bank, NHB’s Working Group on Covered Bonds, NHB’s Working Group on Credit Enhancement Mechanism. He was awarded Best CFO in the financial sector for the 2010 by the ICAI. 

Investment philosophy

They provide flexible capital to developers in diverse geographies in the country for affordable housing projects to support the housing needs of low- and mid-income communities.

Their investment philosophy is grounded in the following principles:

  1. Provide flexible capital, debt or equity, for housing development while generating market returns.
  2. Partnering with credible developers with proven execution ability, local expertise and a conviction for creating viable solutions.
  3. Minimize risk through active asset management with a focus on consistent and predictable results.
  4. Growth through innovation in design & technology leading to better efficiencies, faster execution and scalability.

They are also keenly focused on understanding sustainability and its impact at the grass-root level. These practices are coupled with active asset management to create long term value for the respective stakeholders.

Investment Objectives

The investments are focused towards their stated objective of addressing the demand-supply gap of affordable housing in India. They finance homes in city suburban regions with proximity to social infrastructure for the low & mid income and economically weak customer segments.

They want to be a catalyst for growth for the entire affordable housing eco-system, through financing as well as driving efficiencies of cost and time through active asset management of their projects.

Media 

  1. Title: HDFC, Cerberus tie up for stuck realty Apr 2, 2021, 09:40 IST , Times of India

Link:  https://timesofindia.indiatimes.com/business/india-business/hdfc-cerberus-tie-up-for-stuck-realty/articleshow/81862929.cms

Summary: Recently, HDFC has partnered with U.S private equity (PE) investor Cerberus Capital Management, which specialises in distressed assets, to take over stuck residential projects and provide last-mile findings.

Deepak Parekh (Chairman) cited low confidence in buyers as a current barrier for slowdown in funding in real estate projects, Frank Bruno (CEO) pointed out the planning of providing capitals for the project and Vipul roongta (CEO) talked about concerns related to residential Housing in the current scenario.

  1. Title: Higher tech investment in realty will lead to better governance: Deepak Parekh (Chairman)

April 22 2021. 22:55 IST Published in: Business Standard

Link:  https://www.business-standard.com/article/companies/higher-tech-investment-in-realty-will-lead-to-better-governance-parekh-121042201390_1.html

Summary: He talks about investment in property technology (prop tech), including digital backbone, and cites that it will increase efficiency through real-time monitoring of real estate projects. He was of the opinion that the progress of projects can be monitored through digital dashboards, with data driving key decisions.

Analyst questions

  1. Since real-time data on real estate is hardly available, what all challenges do you see while monitoring these projects through the digital dashboards?
  1. What coping mechanisms do you have to deal with the non-performing current scenarios in the asset market? What proportion of the ongoing stuck projects will again be revived by the company? Will there be a shortage of funding again which may cause the situation to turn down again?
  2. How do you ensure HDFC capital finances are being made to the social infrastructure for the low & mid income and economically weak customer segments as stated in the objective?
  1. You mentioned work from Home scenario will create more funding in the real estate markets. But how does the construction work take place if a lockdown situation exists in the market? And even if cities open, don’t you think companies will call them to the office for work in the long run?  

Prepared by Prabhat Kumar, May 2021  

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