HDFC gains on selling 10% in HDFC Capital to ADIA

HDFC rose 1.43% to Rs 2,169.25 after the company said it will sell 10% stake in HDFC Capital Advisors (HCAL) to an affiliate of the Abu Dhabi Investment Authority (ADIA) for around Rs 184 crore.

Housing Development Finance Corporation (HDFC) will sell 2,35,019 equity shares, or 10% equity, or HCAL at Rs 7,841.49 per equity share.

India's largest private mortgage lender will continue to hold the balance 90% stake in HCAL post the stake sale that values the private equity real estate firm at over Rs 1,840 crore.

The sovereign wealth fund owned by the Emirate of Abu Dhabi is also the primary investor in the alternative investment funds managed by HCAL.

HCAL reported revenue of Rs 66.81 crore in FY21. Set up in 2016, HCAL is the investment manager to HDFC Capital Affordable Real Estate Funds 1, 2 & 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 an approximately $3 billion funding platform which has recently been rated as one of the world's largest private finance platforms focused on development of affordable housing.

HCAL is the investment manager to HDFC Capital Affordable Real Estate Fund 1 (H-CARE 1), HDFC Capital Affordable Real Estate Fund 2 (H-CARE 2) and HDFC Capital Affordable Real Estate Fund 3 (H-CARE 3), which are registered with SEBI as a Category II Alternative Investment Funds. These funds combine to create a $ 3 billion platform targeting the development of affordable and mid-income housing in India.

Deepak Parekh, chairman - HDFC, said: "This investment by ADIA will enable HDFC Capital to leverage ADIA's global expertise and experience to further propel HDFC Capital towards becoming a leading investment platform for global and local investors across multiple strategies and asset classes in the real estate and technology ecosystem."

Mohamed AlQubaisi, executive director of the real estate department, ADIA, said: "This agreement builds on our successful investments in the H-CARE funds and underlines our belief in the positive long term outlook for affordable and mid-market housing in India."

HDFC provides home loans for affordable housing and continues to have the largest number of home loan customers at over 270,000 who have availed benefits under the government's Credit Linked Subsidy Scheme.

The housing finance company's standalone net profit rose 11.44% to Rs 3,260.69 crore on 0.65% increase in total income to Rs 11792.21 crore in Q3 FY22 over Q3 FY21.

Shares of HDFC tumbled 11.85% in the past three sessions.

HDFC and HDFC Bank on 4 April 2022 announced merger, in which shareholders of HDFC will receive 42 shares of HDFC Bank, for 25 shares held in HDFC. As a result, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC will own 41% of HDFC Bank.

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