 "Workers walk past a billboard of DLF Ltd. at Gurgaon on the outskirts of New Delhi")
As many as 25 global institutional investors have expressed interest in bidding for the proposed sale of DLF promoters’ 40 per cent stake in the company’s rental arm DLF Cyber City Developers Ltd (DCCDL). According to estimates, the deal could be around Rs 12,000 crore.
“More than 25 global institutional investors have evinced interest in this proposed transaction. We expect to sign term sheet by the end of March or mid-April and complete the deal by July,” DLF’s senior executive director — finance Saurav Chawla told analysts in a conference call.
In October last year, DLF had announced that its promoters will sell their 40 per cent stake in DCCDL. The remaining 60 per cent stake is held by DLF. Promoters will re-invest a significant part of the amount realised from the sale in DLF.
Also, DLF’s net debt has come down by over Rs 1,100 crore in the quarter ended December 2015 to Rs 21,411 crore, helped by stake sale in its two upcoming projects here to Singapore's sovereign wealth fund GIC in a deal at around Rs 2,000 crore
In the presentation, DLF said the company got Rs 1,708 crore through the GIC transaction after paying the stamp duty.
On Tuesday, DLF reported a 24 per cent rise in net profit to Rs 163.95 crore for the October-December quarter on higher sales and a one-time gain from the GIC deal. Revenues rose 43 per cent to Rs 2,981 crore in third quarter from Rs 2,080 crore a year-ago.
In an analyst presentation, DLF said its net debt fell to Rs 21,411 crore as on December 31, 2015, from Rs 22,520 crore at the end of the second quarter of the current fiscal. Of the total net debt, about Rs 6,000 crore pertains to residential business and the remaining relates to the rental arm. The stake sale will also be put up for Competition Commission of India’s approval. “Hopefully by end of June or July, we will get the approval.”
DLF’s chief financial officer Ashok Tyagi said DCCDL’s debt would be around Rs 12,000 crore by end of the current financial year. The annual rental income attributable to DCCDL is about Rs 2,250 crore, out of Rs 2,700 crore expected rental of the DLF in this fiscal, he added.
With the proposed stake sell likely to get completed in the next fiscal, DLF promoters have deferred the conversion of their compulsorily convertible preference shares in DCCDL to March 18, 2017 on the same coupon rate of 0.01 per cent per annum. In late 2009, DLF had announced merger of its subsidiary DCCDL with promoters' firm Caraf Builders and Constructions. DCCDL had then issued CCPS worth Rs 1,597 crore to promoters. Post-conversion, promoters would have a 40 per cent stake in DCCDL, which holds bulk of the DLF's rental assets.
"Many prospective institutional investors, which include sovereign funds, pension funds and private equity supported by their LPs have evinced interest to participate in the bidding process," the presentation said.
Besides this, DLF said the demand conditions in office space are stable although there is an uptick on rentals as forecast supply of office space has not crystalised. "Extinguished most of the inventory for leasing in Cybercity (Gurgaon). In order to create new inventory, broken ground on a new office project 'Cyber Park' comprising about 1.6 million sft, at a prime location just opposite Oberoi & Trident Hotels, Gurgaon," DLF said.
The Mall of India, Noida, has opened with around 40 per cent retail establishments and DT Cinemas operational. The project will be fully operational by mid-March and is expected to contribute Rs 225-240 crore per annum to the rental income, it said.
The housing market in the last 18 months continues to be soft in most micro markets where DLF has a presence. "The outlook continues to be weak; DLF continues to sell in its existing projects, albeit at a slower pace," it added.
LOOKING FOR INVESTORS
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25 global institutional investors have evinced interest in buying 40% promoters stake
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Deal estimated to be around Rs 12,000 cr
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Company expects transaction to be complete by June-July
- Firm’s net debt at the end of the Dec quarter came down to Rs 21,411 cr from Rs 22,520 cr in the Sept quarter
