DLF offers fewer shares in Rs 13,500 crore IPO

Land holdings more than double in fresh prospectus.

Months after charges of discrimination against minority shareholders forced DLF Ltd to postpone its plan for India's largest initial public offering, the realty major today filed a fresh draft to raise around Rs 13,500 crore, more or less what it planned to raise last May.

Though it has reduced the issue size, DLF's valuation has gone up on account of a substantially larger land bank and a considerable increase in net profits.

The issue size, which constituted 11.9 per cent of the fully diluted post-issue capital in the previous filing, has now been reduced to 10.27 per cent.

Against the 202 million equity shares of Rs 2 each that DLF had offered last time, the company is now offering 175 million, with a greenshoe option. The reduction in the number of shares on offer is on account of DLF promoter KP Singh (India's fifth richest billionaire) and his family not selling any shares held by them.

Sources close to the development said DLF could expect to raise around Rs 13,500 crore from fewer shares as it had "grown as a company and its valuation had gone up". Going by estimates, the share price will be in the range of Rs 825.

Post-dilution, KP Singh and his family's share in DLF will be approximately 87.5 per cent, which will amount to nearly Rs 1,15,019.45 crore. According to the previous filing, the notional value of the holding in the hands of KP Singh and his son Rajiv Singh was Rs 92,899 crore.

Interestingly, DLF has not retained Cushman & Wakefield and Jones Lang LaSalle for valuing its land bank, as was the case last time.

Since it filed its first prospectus, the company's land reserves have increased almost two and a half times to 10,255 acres. In the latest prospectus, the company has declared it can develop approximately 574 million sq ft on this land, with 46 million sq ft already under construction.

Of the money to be raised, DLF intends to spend Rs 6,500 crore on land acquisition and Rs 3,493.3 crore on development and construction under existing projects. It also plans to repay at least 50 per cent of its loans from the issue proceeds.

The company has identified and acquired land in and around 31 cities, which it thinks suitable for residential and commercial projects. For building shopping malls, DLF intends to identify and acquire land in 60 cities across India.

Against a net profit of Rs 191.7 crore in fiscal 2006, the company's net profits for the eight months ended November 2006 stood at Rs 1,830 crore. But, the company's debt has also doubled. From Rs 3,040.8 crore declared in the first prospectus, DLF's debt is now pegged at Rs 6,661.1 crore.

TAPPING THE MARKET

Still looking to raise around Rs13,500 cr

Expected listing price to be around Rs 825

Issue size reduced from 11.9% to 10.27%

Land bank has increased 2.5 times to 10,255 acres

Net profits for eight months ended Nov 2006 was Rs 1,830 cr