Retail housing finance major HDFC Ltd will sell a 10% stake in HDFC Capital Advisors Ltd (HDFC Capital) to a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA) for around ₹184.29 crore. The stake sale will be completed by April 30.
In a statement to the stock exchanges, HDFC said it has entered into binding agreements for the "sale of 2,35,019 equity shares of ~10 each" of its subsidiary HDFC Capital, representing 10% of the fully diluted paid-up share capital. The price at which the shares are being sold stands at ₹7,841.49 per equity share, it said.
"The said shares are proposed to be sold by the Corporation to a wholly-owned subsidiary of Abu Dhabi Investment Authority, the principal investor of all the alternate investment funds currently managed by HCAL," the statement said.
Deepak Parekh, Chairman – of HDFC Ltd, said HDFC Capital was set up six years ago with a vision of progressing in sync with the government's ‘housing for all’ goal by increasing the supply of affordable homes in India.
"Supported by marquee global investors like ADIA, the funds managed by HDFC Capital have grown to create one of the world’s largest private financing platforms for the development of affordable housing,” he said, adding that the investment by ADIA will enable HDFC Capital to leverage ADIA’s global expertise and experience.
Mohamed AlQubaisi, executive director, ADIA real estate department, said the current agreement builds on its successful investments in the H-CARE funds and underlines its belief in the positive long-term outlook for affordable and mid-market housing in India.
HDFC Capital, set up in 2016, manages around $3 billion in funding platform. It's the investment manager of HDFC Capital Affordable Real Estate Funds 1, 2 & 3. The company has aligned itself with the government's goal to boost the housing supply. It also supports the Centre's Pradhan Mantri Awas Yojana -- a ‘housing for all' initiative.
“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. In addition, the funds will also invest in technology companies (construction technology, fin-tech, clean-tech etc.) engaged in the affordable housing ecosystem,” the statement added.
HDFC Capital's total revenue during FY21 stood at ₹66.8 crore. During FY20 and FY19, the revenue stood at ₹61.5 crore and ₹40.1 crore, respectively. ADIA is also the primary investor in the alternative investment funds managed by HDFC Capital, the statement added.
Post the said sale, HDFC Capital would cease to be a wholly-owned subsidiary of HDFC, however, it would continue as a subsidiary. HDFC Capital aims to finance the development of one million affordable homes in India by leveraging innovative financing, partnerships and technology, whilst focusing on sustainability, the company said.
Post the announcement of the stake sale in HDFC Capital, the shares of HDFC Ltd were trading higher after three days of consecutive falls. At 12.26 PM, the HDFC shares were trading 1.46% up at ₹2,171.50 on the National Stock Exchange. The market cap of HDFC also rose to ₹3.9 lakh crore.