'HDFC Capital, Arvind SmartSpaces realty venture can make it big'

The joint real estate investment and development platform between HDFC Capital Advisors and realty developer Arvind SmartSpaces is expected to create an overall revenue potential of Rs 5,000 crore excluding reinvestment prospects, said a top official of HDFC's real estate subsidiary.

Earlier this month, the Ahmedabad-headquartered Lalbhai Group company entered into an agreement with HDFC Capital Advisors to set up a Rs 900-crore platform to undertake residential developments.

HDFC Capital Affordable Real Estate Fund - 3 (HCARE-3) will be investing Rs 600 crore, while Arvind SmartSpaces will infuse Rs 300 crore in this joint investment and development platform.

“Our partnership with Arvind SmartSpaces will focus on the development of high-quality housing. This is in line with HDFC Capital's strategy of partnering with developers with a strong track record of development and delivery. The platform will create an overall revenue potential of up to Rs 5,000 crore excluding reinvestment potential,” said Vipul Roongta, MD & CEO, HDFC Capital Advisors.

The funds invested by both the partners will be utilised for construction and development of housing projects and townships mainly in the cities of Ahmedabad, Bangalore, Gandhinagar, Mehsana, Hyderabad, Pune and Mumbai Metropolitan Region (MMR) or any other geography as may be decided mutually by them.

The investment tenure will be for a period of 24 months from the date of signing of definitive agreements. A total of 6-7 projects will be undertaken under this platform in the current financial year, while a project will be undertaken in Ahmedabad in a couple of months.

“We are happy to deepen our partnership with HDFC. Apart from the precious patient capital, HDFC brings in extensive experience in residential real estate. The platform structure not only de-bottlenecks capitalization at the company level, but it also has enough flexibility inbuilt to ensure that long-term patient capital is made available to the business while efficiently optimizing the balance sheet risk. The partnership leverages our efforts to take on bigger scale projects,” said Kamal Singal, MD & CEO, Arvind SmartSpaces.

The strategic alliance between HDFC Capital Advisors and Arvind SmartSpaces began in 2019 when HDFC Capital Affordable Real Estate Fund 1 (H-CARE 1) set-up a partnership with a focus on the development of affordable and mid-income housing projects across India.

The relationship further deepened in 2021, with the developer making a preferential issue to HDFC Capital Advisors wherein H-CARE 1 subscribed to 8.8% equity stake in Arvind SmartSpaces on a fully diluted basis.

HDFC Capital, set up in 2016, is the investment manager to HDFC Capital Affordable Real Estate Funds 1, 2 and 3; and is aligned with the Government of India’s goal to increase housing supply and support the Pradhan Mantri Awas Yojana-‘Housing for All’’ initiative.

HDFC Capital manages a $3 billion funding platform that has recently been rated as one of the world’s largest private finance platforms focused on development of affordable housing. The funds managed by HDFC Capital provide long-term, flexible funding across the lifecycle of affordable and mid-income housing projects including early-stage funding.

HDFC Capital’s target is to finance the development of one million affordable homes in India through a combination of innovative financing, partnerships and technology, whilst focusing on sustainability.