DLF, GIC may ink Rs 13,000-crore deal soon

Both the parties are likely to sign the definitive agreement by end of this month, say sources

Realty major DLF’s promoters are likely to enter into an agreement this month with Singapore’s sovereign wealth fund GIC to sell their 40 per cent stake in the rental arm in a deal estimated at around Rs 13,000 crore.

In October 2015, DLF had announced that its promoters would sell their entire stake in DLF Cyber City Developers Ltd (DCCDL), which holds the bulk of the commercial assets of the group. The promoters had in March this year entered into an exclusivity pact with GIC to negotiate on this transaction.

According to market sources, both the parties are likely to sign definitive agreement by end of this month.

Sources had earlier said the deal is likely to be valued at Rs 12,000-13,000 crore.

The promoters would infuse a large portion of proceeds from this proposed deal into DLF, which in turn would use this amount to cut its net debt that has reached nearly Rs 26,000 crore.

In an analyst presentation uploaded on Sunday, DLF said that “the company and investor are in the final stages of discussion on the documentation. The transaction shall be put up to audit committee/board for final approval”.

Later, in a conference call with analysts, DLF’s Senior Executive Director (Finance) Saurabh Chawla said the proposed transactions is at the “fag end of the process” and hoped that the deal would be concluded in the near future. Chawla said after the agreement between the two parties, GIC would approach the Competition Commission of India (CCI) for approval, while DLF will have to seek shareholders’ nod.

He said the CCI approval could come by early November.

DLF is expected to achieve a rental income of over Rs 3,000 crore in this financial year, of which about Rs 2,600 crore pertains to the DCCDL. On the sales bookings, Chawla said the company achieved gross sales bookings of Rs 110 crore in April and after that it has halted sales as the real estate regulatory law (Rera) came into effect from May 1. The Rera requires all ongoing projects to be registered with state authority to start sale and advertisements. 

DLF also said its net debt increased by Rs 802 crore during the first quarter of this financial year to Rs 25,898 crore due to poor housing sales and continued outflow in construction of various projects.

According to the analyst presentation, DLF's net debt stood at Rs 25,898 crore as on June 30, 2017, against Rs 25,096 crore at the end of the last financial year.

DLF said that the demand for residential real estate continues to be soft.