To raise Rs 2,000-2,500 crore for realty investment trust.
K P Singh and family, promoters of DLF, are in advanced stages of discussions with leading foreign institutional investors (FIIs) to sell 6 to 7 per cent in India’s largest realtor to raise Rs 2,000 crore to Rs 2,500 crore.
The expected price is between Rs 220 and Rs 230 per share for 100 million shares, investment banking sources said. The promoters currently hold 88.5 per cent of DLF’s equity.
Sources said the deal was expected to conclude “most likely early next week or even before that”. JP Morgan and Deutsche Bank have been appointed to oversee the sale.
The promoters will use the proceeds to infuse funds into DLF Asset Ltd (DAL), the promoter-owned real estate investment trust, to pay off private equity firm DE Shaw, which invested $400 million in 2007 and is due to exit by the end of the month under an agreement.
Asked about the sale, DLF’s vice chairman and K P Singh’s son Rajiv Singh said, “We will inform people at the appropriate time. I have nothing to say at this point of time.”
A senior DLF official said if the promoters are selling their stake the company has no business to comment unless they inform the company.
Meanwhile, in a separate transaction DLF is expected to acquire DAL for Rs 7,500 crore. This effectively means DAL will have to incur a loss of Rs 2,000 crore to Rs 2,500 crore, since it acquired assets from DLF for Rs 10,000 crore in 2007-08.
Apart from DE Shaw, DAL raised $700 million from Symphony Capital through optionally convertible preference shares with a coupon rate of 4 to 6 per cent to fund the asset acquisition from DLF.
D E Shaw was assured of an exit route from DAL after a planned listing on the stock exchange in two years. That route has closed since the real estate market has crashed and is unlikely to see a revival of interest from equity investors in the near future.
Although the detailed due diligence of DAL is complete, sources said the transaction would be concluded after DE Shaw is paid. DAL, after getting the fund infusion from promoters is expected to pay off DE Shaw so to conclude the transaction, sources said.
