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DLF promoters to raise $760 million to bail-out DLF Assets Ltd
| May 13, 2009 |  (Be the first to rate this story!) Loading ... |
In what could be one of the biggest deals in the real estate space in India– the Singh family- promoters of India’s largest real estate company DLF Ltd- are looking to raise $760 million from investors to bail-out its unlisted promoter company DLF Assets Ltd (DAL).
Sources say, the promoters are raising the funds at Rs 223 per share which translates into a 9.9% dilution for the promoter family. The Singh family currently controls nearly 90% of DLF. Some of the large investors with whom the promoters are currently in talks with include HSBC, GIC and T Rowe Price. HSBC also has exposure in Unitech- the other large realty player in India- in its recently concluded QIP process. Industry sources say, the deal is likely to take place via the book building route tomorrow.
Sources say, the proceeds of the raise will be invested in DAL and also enable the redemption of the compulsory convertible preference shares issued by DAL to private equity investor DE Shaw. This is a convenient arrangement for the promoter family. With promoters investing the proceeds of the stake sale in DAL, the company can now use the money to reduce its outstanding receivables to DLF which are a major concern for the investor and analyst community.
DAL — which is owned by the Singh family, the promoters of DLF — houses the IT SEZ projects of DLF, and buys completed IT properties from the real estate company. It needs to pay Rs 4,903 crore to DLF and the company has recently appointed a committee of independent directors to evaluate its options vis-à-vis DAL.
The real estate company has also suspended sales to DAL. DLF vice-chairman Rajiv Singh in an analyst call last week said the company hopes to receive Rs 2,000 crore from DAL this year. DAL is co-owned by private equity fund DE Shaw and London-based Symphony Capital.
A UBS research report dated May 4, 2009, said: “We think the most straight-forward option for the promoters to ensure liquidity to DLF is to sell part of their stake in DLF.”
News Published Under: Real Estate India, Banking and Finance, Real Estate Developers |
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