April 6, 2021: NBFC-major, the banking giant has announced that HDFC and Cerberus is to tie up to fund for real estate projects.
HDFC Capital Advisors and an affiliate of Cerberus Capital Management, L.P. “Cerberus” have partnered to target the creation of a special situations platform that focuses on high-yield opportunities in the Indian residential real estate sector.
The Platform will attempt to purchase inventory and provide last-mile funding for under-construction residential projects across India, among other real estate-related opportunities.
HDFC and Cerberus tie up
In a BSE filing which was made after market hours on April 1, 2021, Thursday, this announcement was made.
HDFC Chairman, Deepak Parekh said, “Lack of buyer confidence in the ability of developers to complete projects combined with a slow-down in funding for real estate projects has resulted in developers being starved of capital to complete on-going projects. This Platform, in partnership with Cerberus, has the potential to provide an impetus to the real estate sector by providing capital solutions to developers and restarting stalled housing projects.”
Frank Bruno, Co-Chief Executive Officer of Cerberus also commented: “Cerberus has a long track record of partnering with businesses and properties around the world. We are able to provide tailored solutions in sectors with dislocated funding channels in various forms, such as the purchase of assets, creation of operating and lending platforms, and provision of structured capital to best-in-class operators. Together with HDFC Capital, we look forward to supporting high-quality developers and leading projects in one of India’s most important sectors.”
HDFC Capital Advisors
HDFC Capital Advisors, a 100% subsidiary of HDFC, provides investment management services for real estate private equity financing and is one of the largest fund managers in the country.
Vipul Roongta, Managing Director and Chief Executive Officer of HDFC Capital, further said: “HDFC Capital is focused on providing flexible financing solutions to developers in the Indian residential real estate sector. Currently, there is a severe shortage of last-mile funding for distressed under-construction real estate projects of even well-intentioned developers. Our partnership with Cerberus is an important step towards easing financing constraints faced by good developers and projects and will kick start execution of residential real estate projects in India.”
HDFC and Cerberus tie up: Reason for its development
The study shows that the development of this platform is in response to a series of shocks to the Indian residential real estate market that has created a significant need for capital. Many buyers have been unwilling to fund projects in advance of completion while traditional financing channels have come under severe pressure.
The Platform intends to partner with quality developers to provide capital solutions and expedite project construction and completion.
HDFC informed on April 3, 2021, Saturday in Regulatory filing that its individual loan business continued to see strong improvements during the quarter ended March 31, 2021.
The corporation assigned loans to HDFC Bank amounting to approximately Rs 7,503 crore compared to approximately Rs 5,479 crore during the quarter that ended on March 31, 2021.
Individual loans sold in 12 months amounted to approximately Rs 18,980 crore as compared to approximately Rs 24,127 crore worth of individual loans sold in the previous year and gross income from dividend was Rs 110 crore as against Rs 2 crore in the same period last year.
In Q3 December 2020, HDFC’s standalone net profit tanked 65.05% to Rs 2,925.83 crore from Rs 8,372.49 crore in Q3 December 2019. Total income stood at Rs 11,716.34 crore in Q3 FY21, dropping 42.25% from Rs 20,291.45 crore in Q3 FY20. It is engaged in financing and in the matter of loans for the purchase or construction of residential houses, commercial real estate and certain other purposes, in India.