US hedge fund makes 40% profit; KP Singh family to go for DLF Assets IPO in the first quarter of 2010
US hedge fund DE Shaw has sold 36 per cent stake in DLF Assets Limited (DAL) for $500 million (Rs 2,333 crore in current exchange rate).
In one of the most profitable deals in real estate space, especially when the sector is on a downturn, DE Shaw has sold its investment in the KP Singh family owned company at a 40 per cent profit over the $400 million (Rs 1,866 crore) that it had invested late 2007.
The fund, which had 40 per cent stake in DAL, would sell the remaining 4 per cent to the Singh family or after an IPO in the first quarter of 2010 for $50-60 million (Rs 233-279 crore), making to the total deal size of $560 million (Rs 2600 crore).
The deal between the two was finalised last week. When contacted, DE Shaw executives declined comment. Sources said DE Shaw was yet to make up its mind whether to sell the remaining stake in the company before or during the IPO.
| IN MAY 2009, KP SINGH FAMILY... |
| * divested 9.9% stake in DLF |
| * mopped up Rs 3,800 cr to buy out DE Shaw investment |
| * DLF announced plan to halve debt from Rs 13958 cr to Rs 7000 cr |
| * planned to sell Rs 5,000 cr of assets |
| * planned to raise Rs 2000 cr from DAL IPO |
DLF Assets was set up as a real estate investment trust to put money into SEZs, infotech parks as well as to buy commercial property assets from group company DLF Ltd, which were put on lease.
With DE Shaw moving out of the company, the Singh family plans to go public in the first quarter of 2010 and list it in the Singapore stock exchange at a premium. According to sources, an earlier listing of DLF Assets in 2008 was shelved because of the crash in global equity markets.
Apart from DE Shaw, DLF Assets has an investment from equity fund Symphony Capital, which holds around 45 per cent stake that it bought for $650 million (Rs 3,024 crore). Symphony is likely to exit the company during the IPO. The remaining 15 per cent is held by the Singh family, which, after the deal with DE Shaw, will go up to over 55 per cent, according to sources close to the deal.
The DLF group of late has been facing cash crunch like most other real estate developers in the country. The share price of DLF Ltd rose to Rs 386.15 today, a gain of 0.91 per cent from Rs 382.65 yesterday.
In May the Singh family mopped up Rs 3,800 crore by divesting 9.9 per cent stake in DLF to buy out the DE Shaw investment. But the deal got delayed due to tax issues as the company is not listed and the US fund would have had to pay hefty capital gains tax on the profit.
DE Shaw with over $30 billion in assets across the globe has invested over $2 billion in real estate, security agencies, entertainment and emerging services in India. Some of the deals are like investments in publishing group Amar Ujala, animation company Crest Communications, and a subsidiary of realty giant HDIL, Mac Star Marketing. It is now looking at arenas like education where some deals could happen soon.
