Hdfc In Parleys With Fii For Real Estate Venture
The Housing Development and Finance Corporation (HDFC) is in talks with an Asian offshore institutional investor for setting up a joint venture company in anticipation of the government opening up the real estate sector for foreign direct investment(FDI).
The equity pattern of the partners is yet to be decided, said Deepak Satwalekar, managing director, HDFC. The company will invest in projects promoted by various developers in the country, especially hospitals and hotels.
The move to set up a joint venture company is an alternative to HDFC's existing plans to float a real estate mutual fund.
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"We will go in either for a joint venture company or a mutual fund. In case of the mutual fund - domestic or offshore - we are looking at a corpus of around $ 200-300 million which will be deployed in housing and commercial projects," said Satwalekar. HDFC has been talking to various foreign investors to place funds with it. If it is set up as a domestic fund, the unit holders will be retail investors.
Floating an offshore fund is again subject to the government opening up the real estate sector. Besides, mutual fund guidelines, at present, does not permit investment in the real estate segment.
"Once the government gives approval for FDI in real estate, the Securities and Exchange Board of India (Sebi) will get the signal that investment in real estate is not a no-no. We expect FDI in real estate to be approved by the cabinet soon," said Satwalekar.
HDFC also intends to launch a housing price index by the end of the year. Initially, the index would track area-wise prices in the major metros. The index will later be extended to cover the entire nation, said Satwalekar.
A leader in housing finance business, HDFC posted a 18.34 per cent rise in net profits for the financial year 1997-98. The retail loans segment grew by 50 per cent during the year, and HDFC is likely to continue focus on this segment this year.