The sovereign wealth fund bullish on India and emerging markets

Indian mortgage lender Housing Development Finance Corporation's (HDFC) investment advisory arm has reached financial close on its billion-dollar affordable real estate fund, which has Abu Dhabi Investment Authority (ADIA), the world's second largest sovereign wealth fund as a key backer.

HDFC Capital Advisors said on Thursday that it had raised $550 million in initial closure on its second affordable housing fund, which will be combined with an earlier fund launched in 2016 to create a $1bn investment pool.

The newly-created fund is set to have a development footprint of 75 million square feet across affordable and mid-income residential projects across 15 Indian cities over the period of two to three years, HDFC said in a statement.


Adia, whose portfolio size remains undisclosed has made significant inroads in the Indian real estate sector this year.

In October, Adia's wholly-owned subsidiary signed a $1 billion investment agreementwith a India's National Investment and Infrastructure Fund to invest in energy, transportation and infrastructure-related sectors.

The Abu Dhabi fund has increasingly pivoted towards the east, increasing its portfolio in China and India, from where it expects continued growth.

Adia remains invested in a number of asset classes, including fixed income and equities in India. It was also reported in July to be in talks to buy 49 per cent of the Rajiv Gandhi Hyderabad International Airport, which serves the capital and IT-hub of the eastern Indian states of Andhra Pradesh and Telangana.

"India’s housing market presents a compelling investment opportunity driven by the country’s continued economic growth and backed by supportive government initiatives. Our investment in HDFC’s platform aims to meet the strong demand for early-stage financing of housing projects and encourage the continued growth of the affordable and mid-income residential sector."