DLF plans to float 3 private equity funds

DLF, which is shortly entering the capital markets for raising around Rs 9,000 crore, is planning to float three private equity funds totalling $8 billion this August. The funds will be syndicated to foreign investors and are likely to close by December.

The three funds will finance the company's projects including infrastructure development such as roads and highways (a $2 billion fund), super luxury hotels ($1 billion) and two integrated townships of 20,000 acres each ($5 billion) by the DLF-Nakheel joint venture company.

While the IPO proceeds would be utilised for financing DLF projects, the raised capital is not expected to cover the company's aggressive expansion plans. This is why DLF is looking at the fund route.

"DLF will not have more than a 20-33 per cent equity stake in these funds. The funds will, however, be structured in such a way that around 50 per cent of the profits will go to the company. This is because DLF will run the businesses and will therefore be able to levy a license fee," said a source close to the development.

While there is a strong possibility of DLF listing these funds overseas, it has ruled out the Alternative Investment Market (AIM) at London as a destination. "It is not remunerative enough in the long term," added the source.

DLF had disclosed its intentions of foraying into infrastructure development last March, when it forged a 50:50 joint venture with Laing ORourke, a London-based infrastructure-cum-real estate company.

This joint venture plans to construct roads, highways, harbours, tunnels and pipelines in India. Since last year, the two companies have bid for approximately 10 projects.

The Indian realty company is also looking to set up super-luxury hotels at prime locations such as Chanakyapuri in New Delhi, near its Arnold Palmer signature golf course in Gurgaon, Mumbai and Bangalore.

While DLF has a 74:26 joint venture with Hilton International for developing 50 to 75 properties across the country, the super-luxury hotels may not be a part of this agreement.

Nakheel and DLF are looking to invest $10 billion for two integrated townships spread across 40,000 acres in Gurgaon and South Maharashtra/ Goa.

Nakheel is expected to be one of the foreign investors for the township-related fund.