Carlyle backs Indian housing developer

The global firm has set sights on the growth potential of India’s affordable housing sector with a $26m investment from its fourth Asia growth fund.

Global private equity firm The Carlyle Group has made a $26 million investment in India’s Value & Budget Housing Corporation (VBHC), which aims to build one million affordable entry level homes over the next 10 years across urban India.

The investment will be made from Carlyle Asia Growth Partners IV, a $1.04 billion sector-agnostic vehicle closed in June 2009, according to a statement.

“VBHC is a play on the strong unmet demand for affordable housing in India, which is estimated at more than $200 billion,” Wayne Tsou, managing director and head of Carlyle Asia Growth Capital, said in the statement.

Based in Bangalore, VBHC is a real estate company with backing from India’s home financer Housing Development Finance Corporation (HDFC). Its projects are located in the urban periphery and are connected to the city’s central transportation system. Each of the projects will be self-sufficient and will contain an on-site English medium school, working women’s centre, day care medical centre and a local shopping complex, the statement noted.

Indian housing attracts not only private equity investors like Carlyle but also private equity real estate investors. Although the country's real estate has been a tough market to penetrate, mass residential presents some good opportunities for international investors, according to Glenn Uren, managing director at fund of funds manager Franklin Templeton Real Estate Advisors.