HDFC to invest Rs 10 billion in stressed asset fund for realty segment

Housing Finance Development Corporation (HDFC) had also bid for buying out public sector lender Canara Bank's 30 per cent stake in CanFin Homes

Housing Finance Development Corporation (HDFC) is planning to put up to Rs 10 billion in a stressed asset fund for the realty segment.

Implementation from last year of the Real Estate (Regulation and Development) Act is expected to throw up a number of opportunities for the restructuring of real estate entities and to nurse stressed assets. 

In December 2017, Keki Mistry, vice-chairman and chief executive of HDFC, had said the plan was to acquire incomplete projects and complete these, using the company’s brand image to sell space. Asked if they would go solo, Deepak Parekh, chairman, had said they were looking for a possible partner. He had noted that the company did not have expertise on assets put under insolvency rules.

HDFC has approval from its shareholders to raise up to Rs 130 billion in capital from qualified institutional investors. Of this, about Rs 85 billion would be invested in HDFC Bank to maintain its stake at 21 per cent in the latter’s expanded capital base. 

HDFC is also exploring opportunities in the health insurance sector, with its subsidiary, HDFC ERGO General Insurance Company. A bid for Star Health Insurance did not succeed and it is looking at other entities in the segment.

HDFC had also bid for buying out public sector lender Canara Bank’s 30 per cent stake in CanFin Homes. However, the bank had dropped the plan. 

The other proceeds from the capital-raising would be used to also fund the growth of subsidiaries HDFC ERGO, HDFC Education and Development Services, and HDFC Credila Financial Services (an educational loan arm).