DLF prices IPO at Rs 525

Delhi-based DLF Ltd has priced its initial public offer at Rs 525 a share, a discount of 4.5 per cent to the higher end of the price band of Rs 500-550.

At the issue price, the offering size is Rs 9,187.5 crore. The shares are likely to be listed in the first week of July.

The issue, which closed on Thursday, was subscribed 3.47 times due to prolific bidding by 300 foreign institutional investors from all over the world. The FII portion was subscribed more than five times.

"The international response to this issue has validated India's domestic growth story as one of the leading investment themes and also reaffirmed the appetite for quality issues," said Hemendra Kothari, chairman, DSP Merrill Lynch. 
 

A REALTY CHECK OF INDIA
(Major FII bids for the DLF issue)	(Rs cr)
Merrill Lynch	4,730
DSML (Deutsche Securities)	4,042
Lehman Brothers	2,200
ABN Amro	1,639
HGIFML	1,477
Top50Asien	816
Federated Kaufm	804
UBS	455
BNP Paribas	426
Quantam Ltd	323
Deutsche	289
Nomura	206

Merrill Lynch and Deutsche Securities topped the list by putting in bids worth over $1 billion each in the issue. Lehman Brothers and ABN Amro were the other leading bidders.

Analysts said the success of the DLF issue will pave the way for more IPOs by real estate companies. Prithvi Haldea of Prime Database said nearly 50 real estate companies will come out with IPOs in the next two years.

Companies such as Purvankara Projects, HDIL and Kolte Patil have already filed their draft prospectus with the Securities and Exchange Board of India (Sebi) and are awaiting the regulator's nod. Another real estate player, Omaxe, is expected to launch its IPO next month.

"The buoyant response to the DLF and Vishal Retail IPO has busted the myth that investors will fall short of liquidity while investing in mega IPOs. The secondary market is doing well and the market has a good appetite for quality IPOs," Haldea said.

Rajen Shah, chief investment officer of Angel Broking, said realty companies that had delayed their IPO plans following regulatory changes in the valuation norms will now take a call on tapping the markets.

"We don't see any sharp market correction following these two big issues. But the market will remain range-bound. DLF has witnessed mass participation, as a result of which the stock will see huge volumes, irrespective of whether it makes big gains on debut," he said.

Valuation of land has been an issue with realty firms. In April, the Sebi specified that these companies should not calculate their land banks based on future value of developed projects.

Following this, companies that had filed their draft prospectus had to re-file their documents and a few delayed their IPO plans pending more clarity on the issue.

The Sebi has also mandated grading of IPOs for which draft applications were filed after May.