DLF Founders Sell $ 778 Million Shares to Institutional Investors

May 15, 2009	(1 votes, average: 5 out of 5)  Loading ...
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The founders of India’s largest real estate company DLF sold Rs38.6bn ($778m) of shares -yesterday to institutional investors in one of the biggest equity fundraisings in India since the country’s stock market crashed early last year. The company’s founding shareholders led by KP Singh, who is ranked among the richest people in India, sold a 9.9 per cent stake to reduce the family holding to 78.6 per cent, taking advantage of an upswing in the market during national elections this month. “The transaction saw a strong response with -significant demand from most of the large institutional shareholders as well as several high quality new accounts,” the company said of the block trade, which was performed on the open market.

The sale by DLF, seen as one of the hardest hit companies in India from the fallout of the global economic crisis, follows similar moves by other struggling companies, such as real estate group Unitech, which recently sold $325m of shares, and wind turbine maker Suzlon Energy, which sold $47m of stock. India’s stock market was until early last year one of the most robust in the world for new equity offerings, culminating in the country’s biggest listing, the initial public offering of Reliance Power, in January. But shortly after the Reliance offering, the market crashed, leading dozens of companies to pull or put on hold planned listings. Since March, however, the market has rebounded 49 per cent from its lows and ended yesterday at 12,019.65 points.

The revival has fuelled optimism that a stable coalition will come to power once the results of national elections this month are announced on Saturday, along with signs of a recovery in the economy. “We are expecting growth to start picking up in the second half of the fiscal year, which is from October onwards. But it will depend a lot on the policies of the new government as well as the removal of uncertainty that this election has been causing,” Tushar Poddar, chief economist with Goldman Sachs India, said yesterday. DLF said the capital raising was the largest in India’s real estate sector, which has been stricken by falling prices and lack of demand, since the company staged its initial public offering in July 2007.

It sold 168.1m shares at Rs237 per share in the block deal, less than half the price of its IPO when it sold its shares for Rs525 each. The company’s market capitalisation today is $8bn compared with a January 2008 high of $23bn. DLF shares ended yesterday down 1.59 per cent at Rs232.50. The broader Sensex Index ended down 1.14 per cent at 12,019.65 points.

News Published Under:   Real Estate India, Real Estate Companies |

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