HDFC Capital Advisors plans to raise $2 billion private credit fund

An arm of India’s biggest lender HDFC Bank is seeking to raise as much as $2 billion for a real estate private credit fund as demand for new homes surges in  the country.

 

HDFC Capital Advisors  is looking to raise $1 billion, with an option to expand the fund by an additional $1 billion, according to people familiar with the matter. The investor base will consist largely of international institutional investors, the people said, asking not to be identified discussing private information. 

 

The fundraising underscores an increased appetite for credit in India as real estate firms launch projects to meet demand from customers reviewing their home purchase decisions after the pandemic.

 

HDFC’s funds typically commit debt to low and mid-income housing projects across the top six metropolitan regions in India, the people said. HDFC Capital, a subsidiary of mortgage financier Housing Development Finance Corp. which merged with HDFC Bank in July, has committed about $3.5 billion to various projects so far, they said. HDFC Capital declined to comment. 

 

Lending to real estate is the top bet of fund managers in India, with expectations the sector will achieve the strongest deal flow in the next 12 to 24 months, a survey by consulting firm EY showed. Property prices increased by 7.34 per cent in June from a year ago, while the supply rose by 6.77 per cent, according to the  Housing.com-ISB Housing Pricing Index.