DLF promoters up stake for sale on good response
Business Standard, May 13, 2009, Page 1
Arun Kumar / New Delhi
Bid process started late Tuesday evening; to be concluded on Wednesday.
Strong response from institutional buyers has prompted the promoter family of India’s largest real estate company DLF to raise the shareholding it had put up for sale from 100 million shares or 6 per cent to 168 million shares or nearly 10 per cent to raise Rs 3,850 crore from qualified institutional investors, including foreign investors.
The process, which is being overseen by Deutsche Bank and JP Morgan, started late Tuesday evening and is expected to close before the stock market opens on Wednesday.
The price band for the issue is Rs 223-230. Sources, however, said the issue is expected to conclude at roughly Rs 228 per share. DLF’s Tuesday closing prices on the Bombay Stock Exchange was Rs 236.25.
The transaction will be concluded through bulk deals on the stock exchanges on Wednesday, sources said. Routing bulk deals through the stock markets would save the K P Singh family capital gains tax of 20 per cent plus surcharge, said bankers close to the transaction. Trading on the market would attract only the Securities Transaction Tax of 0.125 per cent.
Proceeds from the sale are expected to be invested in DLF Assets Ltd (DAL), the promoter-owned real estate trust, which is in the midst of restructuring. Of this, around Rs 2,100 crore will be used to pay hedge fund DE Shaw, which had invested $400 in 2007 through optionally convertible preference shares. The rest will be used to repay part of DAL’s Rs 5,400 crore debt to DLF Ltd.
After the transaction, the promoters’ stake will drop to 78.6 per cent from the current 88.5 per cent. Asked about the sale, DLF Vice-Chairman Rajiv Singh said, “I am not in a position to react because bankers are advising us on the issue.”
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 2,500 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 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.
Business Standard, May 13, 2009, Page 1
Arun Kumar / New Delhi
Bid process started late Tuesday evening; to be concluded on Wednesday.
Strong response from institutional buyers has prompted the promoter family of India’s largest real estate company DLF to raise the shareholding it had put up for sale from 100 million shares or 6 per cent to 168 million shares or nearly 10 per cent to raise Rs 3,850 crore from qualified institutional investors, including foreign investors.
The process, which is being overseen by Deutsche Bank and JP Morgan, started late Tuesday evening and is expected to close before the stock market opens on Wednesday.
The price band for the issue is Rs 223-230. Sources, however, said the issue is expected to conclude at roughly Rs 228 per share. DLF’s Tuesday closing prices on the Bombay Stock Exchange was Rs 236.25.
The transaction will be concluded through bulk deals on the stock exchanges on Wednesday, sources said. Routing bulk deals through the stock markets would save the K P Singh family capital gains tax of 20 per cent plus surcharge, said bankers close to the transaction. Trading on the market would attract only the Securities Transaction Tax of 0.125 per cent.
Proceeds from the sale are expected to be invested in DLF Assets Ltd (DAL), the promoter-owned real estate trust, which is in the midst of restructuring. Of this, around Rs 2,100 crore will be used to pay hedge fund DE Shaw, which had invested $400 in 2007 through optionally convertible preference shares. The rest will be used to repay part of DAL’s Rs 5,400 crore debt to DLF Ltd.
After the transaction, the promoters’ stake will drop to 78.6 per cent from the current 88.5 per cent. Asked about the sale, DLF Vice-Chairman Rajiv Singh said, “I am not in a position to react because bankers are advising us on the issue.”
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 2,500 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 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.
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