DLF to Buy Property Arm of Dubai World

DLF is buying out the property arm of Dubai World, its foreign partner in the 50:50 joint venture to make Bidadi Knowledge City. A wholly-owned arm of DLF will buy out the stake owned by Limitless Group, which is a part of Dubai World, for around Rs 200 crore, the Economic Times reported, citing sources with direct knowledge of the transaction.

DLF will buy the 50 per cent held by two Limitless Group entities for a price less than the net worth of the shares, as per the deal. The discount would amount to Rs 10 crore for the entire block of shares held by Limitless. Dubai World is the investment vehicle of the Dubai government.

One person with knowledge of the development said Limitless is likely to be paid around $42.8 million, compared with its investment of $50.5 million. Limitless will get less in dollar terms, due to change in forex rates during the past three years. In rupee terms, however, it would be paid almost the same money it had invested.

The Bidadi project was to come up in 9,178 acres. The project that was to have office complexes, shopping malls and entertainment space, besides housing facility for over 7-lakh people, never took off. On getting access to the land, the JV was to start construction work during the first half of 2008 and complete it by 2016 end.

The Karnataka government was to secure the land for the project, but, couldn’t initiate the acquisition process and last year returned the Rs 400 crore that was funded equally by the two partners. The JV then tried to acquire land on its own, but failed and that prompted the exit of Limitless.

According to the report, post this transaction, DLF can use the funds for other projects. However, one stumbling block could be the three-year lock-in clause for foreign investment in real estate sector. Foreign direct investment (FDI) norms do not allow repatriation of original investment up to three years from the time of minimum capitalisation of realty projects, but foreign investors have a window of exiting before the lock-in period ends if the Foreign Investment Promotion Board (FIPB) allows it.

DLF Limitless Developers has approached FIPB, the nodal body for clearing FDI in the country, for getting a green signal for the proposed transaction, one of the persons with knowledge of the development was quoted as saying.

News Published Under:   Delhi, Faridabad, Gurgaon, Hyderabad, Kolkata, Mumbai, Property Prices, Real Estate Companies, Real Estate Developers, Real Estate India |

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