Japan’s SuMiTB makes first Indian realty fund investment with HDFC Capital

MUMBAI: Japan's Sumitomo Mitsui Trust Bank (SuMiTB) has made its first investment in an Indian real estate fund by committing capital to HDFC Capital Development of Real Estate Affordable and Mid-Income Fund (H-DREAM Fund), managed by HDFC Capital Advisors, the real estate private equity arm of the HDFC Group.

This is the second Japanese institutional investor in HDFC Capital's H-DREAM Fund, following the Development Bank of Japan (DBJ), which committed capital to the fund in May.

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The H-DREAM Fund has a target corpus of $500 million, along with a greenshoe option of another $500 million, taking its potential fund size to $1 billion. Following this commitment, the fund’s secured investor commitments have topped $400 million.

“This investment represents our first commitment to an Indian real estate fund and marks an important milestone for us. We see it as the foundation of a long-term relationship with HDFC Capital and the broader HDFC Group, creating new opportunities to further expand our business in India,” said Riro Sato, Director, Senior Managing Executive Officer, SuMiTB.

The investment marks a key step in SuMiTB's real estate investment strategy in India and reflects the participation of international institutional investors in domestic real estate financing platforms.

“Patient, long-term capital has an important role to play in supporting the development of sustainable housing and resilient urban communities. This partnership also reinforces the growing economic and investment relationship between India and Japan, built on shared values, institutional trust and a long-term outlook,” said Vipul Roongta, CEO, HDFC Capital.

H-DREAM is among the first real estate private credit funds globally focused on financing the development of green, affordable and mid-income housing. The fund provides financing to residential projects that cater to affordable and mid-income segments while implementing the Excellence in Design for Greater Efficiencies (EDGE) green building framework.

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The framework is aimed at promoting resource-efficient buildings and aligning project development with global sustainability standards.

HDFC Capital Advisors is among India's largest real estate private equity platforms, with a focus on affordable and mid-income residential development. Its funds collectively create an investment platform of more than $5 billion.

The H-DREAM Fund is targeting residential projects that combine financing for affordable and mid-income housing with green building standards, an area that has increasingly attracted attention from institutional capital and global investors.

SuMiTB's investment has been made through HDFC Capital's offshore feeder fund structure established under the International Financial Services Centres Authority framework at Gujarat International Finance Tec-City (GIFT City).

The investment also adds to the use of GIFT City-based offshore fund structures for channelising international capital into India's real estate sector.

Established in 1925, SuMiTB is Japan's largest trust bank, with $2.1 trillion in custody assets and $1.2 trillion in assets under management. Its businesses span commercial banking, asset management, trustee services and real estate brokerage.