Dubai: Qatar Holding (QH) is investing $250 million in Mumbai-based ArthVeda Fund Management Pvt. Ltd’s (AVFM) affordable low and middle income (LMI) housing fund, which projects an internal rate of return (IRR) of 18 to 21 per cent.

The Qatar Holding’s investment in the Indian fund comes close on the heels of the Indian Government declaring affordable housing as infrastructure category in the recently announced federal budget.

Qatar Holding LLC is a private equity firm specializing in strategic and direct investments in private and public equity. AVFM is part of the Wadhawan Global Capital which includes the flagship Dewan Housing Finance Corporation Ltd (DHFL).

“The subscription of the entire corpus of its FDI-compliant affordable housing fund by Qatar Holding was the first substantial foreign inward investment into India’s affordable housing segment spanning LMI residences, immediately after India’s Union Budget on Feb 1, 2017,” said Bikram Sen, CEO of ArthVeda

The sweet spot of LMI residential real estate in India offers a significant opportunity to grow investments. AVFM has plans to build on this success by conceiving more of such vehicles.

According to ArthVeda’s estimates India needs to build 19 million urban housing units in the low and mid-income category by 2022 across Tier 1, 2 and 3 cities which requires a capital of $1 trillion.

AVFM is part of Wadhawan Global Capital, a financial services conglomerate, with Dewan Housing Finance Corp. Ltd (DHFL) as the flagship entity. DHFL has over three decades of track record in lending to LMI segment in India.

It has lent over $25 billion to this segment and overall, DHFL along with its associate housing finance company, Aadhar Housing Finance, lends on an average $350 million in a month to home buyers at more than 500 locations in India.

“AVFM’s Affordable Housing Fund leverages our entire group’s leadership in the LMI lending segment and applies that to investments in affordable housing. I am very proud that a prestigious institution from Qatar has invested in this fund through ArthVeda,” said Kapil Wadhawan, Chairman and Managing Director of DHFL and ArthVeda.

Apart from the Affordable Housing Fund, which is AVFM’s first offshore fund raising, other domestic real estate funds of the asset management company have been hugely successful.

AVFM’s domestic $17 million Dream Fund, which exited in 2015 gave a gross IRR of 17 per cent to investors. A mid-income $22 million domestic Star Fund I, which is due to achieve exits from all its investments in the next couple of months, will give equally high returns.

A domestic low-income housing fund, Asha, is currently in deployment phase.