The focus on affordable housing by the central and state governments appears to have encouraged Mahindra Lifespace and HDFC Capital to enter a joint venture platform (JV) to build affordable housing projects in Indian cities.
“The firm advised Mahindra Lifespace on all aspects related to the structuring of the transaction, nature of investment, land conveyance and development, addressing diligence and liability allocation issues,” said Vishnu Jerome, whose firm, Jerome Merchant + Partners (JMP) served as sole legal adviser.
The Mahindra Happinest Developers JV announced an investment commitment of ₹5 billion (US$77 million) over a period of three years. The first development will be Happinest Palghar in Maharashtra state, which will be launched in the second half of 2017-18 financial year. Mahindra Lifespace will have a 51% stake, whereas HDFC Capital will have a 49% shareholding in the JV.
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JMP also advised on the drafting, finalization and negotiation of the transaction documents. The transaction was led by Jerome and partner Sameer Sibal. Shardul Amarchand Mangaldas & Co advised HDFC Capital.
The JV seeks to tap the demand-supply gap in affordable housing with an estimated development footprint of 5-10 million square feet as per Mahindra Lifespace. “The objective of this platform is to invest in residential affordable housing projects by providing long-term equity. Lack of patient long-term capital is one of the key challenges facing growth and development of low and middle-income housing in India,” said Vipul Roongta, CEO of HDFC Capital Advisors.
Prime Minister Narendra Modi launched the Pradhan Mantri Awas Yojana-Housing for All scheme in 2015 with a target to provide nearly 20 million homes over a seven-year period. The government in the 2017-18 budget gave infrastructure status for affordable housing projects, which makes builders eligible for institutional funding, state incentives, subsidies and tax benefits.
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