Housing Development Finance Corp, India’s largest mortgage lender, plans to raise its fourth property fund from overseas investors, said two people close to the development.
Housing Development will seek to raise $600 million for residential and commercial projects in India’s largest cities, starting with an investor roadshow in Singapore from November, said the source requesting anonymity as public announcement is yet to be finalized.
The HDFC officially declined to comment.
Property demand has weakened in India’s biggest cities as the country’s central bank has raised the benchmark interest rate 12 times since March 2010 by a total of 350 basis points. That is the fastest round of increases since the Reserve bank of India was established in 1935.
This has left developers with a shortage of cash and expensive debt. Raising money should not be difficult for Housing Development, given its credentials, Pranay Vakil, Chairman of Knight Frank said. “The more difficult problem these days is deploying money in the right kind of assets. A lot of funds have deployed money and not all of them are successful.”
As per the source Housing Development will mainly tap investors from the Asia-Pacific region and the US for the private equity fund. The Mumbai-based company aims to invest about 40 percent of the fund in residential projects on the outskirts of India’s largest cities, and as much as 30 percent in commercial developments.
Three private equity funds have raised a combined $248 million for India-focused real estate investments in the first nine months of this year, according to data provided by Venture Intelligence, a Chennai-based research service. That compares with $75 million raised by one fund in 2010, it said.
