IIFL Group is looking to raise Rs 18 billion from offshore and domestic investors for its new affordable housing fund by next month. It will be the largest fund raise by an Indian fund manager for affordable housing this year.
In September, Motilal Oswal Real Estate raised Rs 5.75 billion to invest in affordable housing. Last year, HDFC Capital raised $550 million to invest in the same sector.
"We have already raised Rs 16 billion. By next month, we will reach Rs 18 billion. The money was raised from domestic family offices and high-networth individuals, institutional investors and family offices abroad," an IIFL spokesperson said.
The money would be invested in affordable housing projects in tier-1 cities, and four to five tier-II cities, the spokesperson added. It has already deployed Rs 750 million in a project in Bengaluru and Rs 1.1 billion in Chandigarh.
Banking on government push for affordable housing and demand for affordable units, many developers and PE funds have floated affordable housing funds or platforms.
Last year, International Financial Corporation (IFC) and HDFC collaborated to create an $800-million corpus to invest in affordable housing projects. Mahindra Lifespace Developers partnered with HDFC Capital Affordable Real Estate Fund-I of HDFC Capital Advisors to form a platform focused on developing affordable projects. The fund has an investment commitment of Rs 5 billion over the next three years.
Earlier this year, Prestige Estates Projects created an affordable housing platform with HDFC Capital Advisors, a subsidiary of HDFC, to jointly invest Rs 25 billion in low- and mid-income housing projects.
Shapoorji Pallonji Group is in talks with investors such as IFC, Asian Development Bank (ADB) and Britain-based private equity fund Actis to raise $250 million for its second affordable housing platform, said sources. IFC and ADB were two of the three outside partners in the first such platform, too; the third was Standard Chartered, whose realty portfolio in Asia has since been bought by Actis.