DLF buys peace with minority shareholders

Nov 14 EGM to shower bonanza on 950 investors.

The 950-odd minority shareholders of DLF Universal are set to become crorepatis overnight.

To clear the final hurdle for its Rs 10,000 crore initial public offering (IPO), DLF has convened an extraordinary general meeting (EGM) on November 14 to approve allotment of the unsubscribed portion of its last year's rights-cum-debenture issue to minority shareholders.

DLF's IPO, which was delayed after minority shareholders complained to the Securities and Exchange Board of India (Sebi), the ministry of company affairs and the Delhi High Court, is expected to proceed smoothly following the management's decision.

After the proposed rights-cum-debenture issue, a common shareholder with 50 DLF shares will get 20,000 shares of Rs 2 each. Going by the proposed IPO price of a minimum of Rs 600 a share, the shares' value will be Rs 1.20 crore.

"We are thankful to the DLF management for its decision to allot shares to minority shareholders," said Kishore Ghajiya, a Rajkot-based minority shareholder, whose 3,287 shares (after the rights, bonus and split) will increase to 1.28 million shares of Rs 2 each.

At the proposed IPO price, his shares will be worth a whopping Rs 70 crore.

A DLF spokesperson confirmed the development. The letters for the EGM to all the minority shareholders have been issued through Karvy Computer Share, the registrars for DLF Universal.

Last year's debenture-cum-rights issue had seen DLF's promoter KP Singh and his family increase their stake in the company to 99.5 per cent. With the proposed issue to minority shareholders, the promoter family's stake will be diluted by 2 per cent to 97.5 per cent.

"We are withdrawing all our complaints against the company," said Raja Roy Chaudhary, another minority shareholder.

Market players expect the company to file a new draft prospectus with Sebi any day after the EGM. Following the withdrawal of the minority shareholders' complaints, the IPO document was expected to clear the Sebi hurdle, said an investment banker.