Carlyle to invest $26 million in Value & Budget Housing

While one side real estate companies are finding it tough to attract investments, Bangalore-based value & Budget Housing Corporation (VBHC) has roped in The Carlyle Group for a private placement in its venture.  The global alternative asset manager has agreed to invest $26 million in VBHC that pioneered the construction and development of affordable entry level housing in India. Avendus Capital served as the sole financial advisor to VBHC for the transaction.

Wayne Tsou, managing director and head of Carlyle Asia Growth Capital, said, VBHC is a play on the strong unmet demand for affordable housing in India, which is estimated at more than $200 billion. “The demand for affordable housing will continue to grow quickly due to urbanisation, increasing number of nuclear families, rising income levels and strong desire for home ownership,” said Tsou.

The funds to be placed in VBHC will be from Carlyle’s FCG IX which is a part of Carlyle Asia Growth Partners IV (CAGP IV) – a $1.04 billion sector-agnostic growth capital fund. Existing investors in VBHC have also committed additional capital alongside Carlyle though detailed financial terms were not made public.

Co-founded by Jaithirth Rao and P S Jayakumar to build one million affordable entry level homes over 10 years across urban India, VBHC has already sold more than 1,000 units in the last 12 months and the sale of another 900 units is expected to start next month. VBHC is setting up an expansive network of integrated housing projects across the country using the latest industrial engineering and construction technology to improve the construction process and build scale through standardisation.

According to Jaithirth Rao, chairman, VBHC has been focusing on delivering high quality affordable entry level homes to its customers. “Through The Carlyle Group association, we hope to leverage their relationships as we continue to fulfill our vision of building a million affordable entry level homes in this country,” he said.

Transforming real estate development into a lean industrial process amenable to mass production with the use of the ‘form’ technology for construction, “VBHC plans to replicate the success of project Vaibhava in Bangalore and aims to develop a strong nationwide footprint,” said P S Jayakumar, managing director, VBHC.