Carlyle invests in Jerry Rao's housing venture

Last Updated: Fri, Aug 26, 2011 04:10 hrs

Fund to invest $26 million.

Global alternative asset manager The Carlyle Group on Thursday announced it will invest $26 million in Value & Budget Housing Corporation (VBHC), a budget housing project — Value & Budget Housing Corporation — being put up by technology entrepreneur Jaithirth (Jerry) Rao.

The capital, which will be used to fund the building of these new homes, comes from FCG IX, 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.

The transaction has been closed. VBHC had earlier raised funds from HDFC and India Financial Inclusion Fund advised by Caspian Advisors.

VBHC was co-founded by Jaithirth Rao and P S Jayakumar with a vision to build 1 million affordable entry-level homes over a period of 10 years across urban India. Over 1,000 units have been sold in the last 12 months and the sale of another 900 units will start next month. VBHC is setting up an expansive network of integrated housing projects across the country that will apply the latest industrial engineering and

construction technology to improve the construction process and build scale through standardisation.

VBHC projects are in the urban periphery and are well connected to the city’s central transportation system. 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 to be over $200 billion. The demand for affordable housing will continue to grow quickly due to urbanisation, increasing the number of nuclear families, rising income levels and a strong desire for home ownership.”

Jaithirth Rao, Chairman of VBHC, said, “We are happy to be associated with The Carlyle Group and hope to leverage their relationships as we continue to fulfill our vision to build a million affordable entry level homes in this country.”

P S Jayakumar, Managing Director of VBHC, said, “VBHC has been able to transform 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 the project, Vaibhava, in Bangalore and aims to develop a strong nationwide footprint.”

Shankar Narayanan, Managing Director and Head of Carlyle Growth Capital in India, said, “VBHC has developed a differentiated model to cater to this large demand wherein it treats land as the raw material and focuses on cost efficient, quick and high quality construction.” Avendus Capital served as the sole financial advisor to the company for the transaction.

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