DLF to raise Rs 10,000 crore in 3 years through asset sale
The Economic Times, May 14, 2009, Page 17
Owners Sell 9.9% In DAL For Rs 3,860 Crore In Open Mkt Transactions
Sanjeev Choudhary & Chaitali Chakravarty, NEW DELHI
DLF, India’s largest real estate company, is looking to raise Rs 10,000 crore in the next 2-3 years through sale of its treasury investments, land parcels and real estate projects, said its vice-chairman Rajiv Singh.
Mr Singh’s family, promoters of the cashstrapped DLF, had sold 9.9% stake in the company on Wednesday for Rs 3,860 crore in open market transactions.
ET Now had first reported on Thursday that DLF promoters were selling stake. Capital group picked up close to 5% stake in DLF, while HSBC, GIC and Fidelity bought smaller stakes. The transactions were done at Rs 230 per share. DLF shares closed marginally down at Rs 234 at NSE on Wednesday.
On the timing of the stake sale, Mr Singh said, “If it was the best or the worst, one would know only in hindsight, but it was surely the right solution in the current circumstances.” DLF had mopped up Rs 9,000 crore in an IPO less than two years ago. The company’s shares had peaked in January 2008, crossing Rs 1,200 but declined to a low of Rs 124 earlier this year.
Mr Singh said he started thinking of the stake sale only a few weeks back, adding a successful qualified institutional placement (QIP) by rival realty firm Unitech too played a part in promoter’s decision to sell stake. “Unitech’s QIP did give a positive signal that investors were interested in buying stocks. It really helped,” he said.
The funds raised through the stake sale will be advanced to privately held promoter group company DLF Assets (DAL), which purchases properties from DLF. Mr Singh said he was still working on the form of fund infusion in DAL, as to whether it will be in the form of equity or some other instrument. The fund infusion in DAL will be used to buy hedge fund DE Shaw’s $400 million (Rs 2,000 crore) investment in DAL and also to pay back to DLF around Rs 1,600 crore.
Besides this, DAL is expecting to raise Rs 2,000 crore in debt through securitising its rental income this year. Together, these fund raising initiatives at DAL will bring down DLF’s receivables from DAL from Rs 4,900 crore to around Rs 1,300 crore.
A panel of independent directors is working on ways to integrate DLF and DAL. DAL will continue to exist as an independent entity, but its ownership may change, Mr Singh said. Therefore, DAL will not be merged with DLF, but may become a subsidiary of DLF.
While elaborating on DLF’s plans to raise Rs 10,000 crore through sale of assets and its portfolio of investments, Mr Singh did not give details of its portfolio of investments, but said negotiations with buyers are currently under way. The company will also sell some of its hotel projects and certain businesses such as wind power to raise the amount.
The sale proceeds will be used to repay part of DLF’s Rs 14,000 crore debt. “Our target is to halve our debt this year,” he said. The assets that will be disposed off are “not contributing revenue in the short-term and are not strategic in the long-term”, he said.
DLF had earlier this month said it would raise Rs 5,500 crore through asset sale in FY10. The company expects to raise Rs 3,500 crore by the beginning of the third quarter this fiscal. The sale of promoter’s stake has come just days after the closure of DLF’s buyback programme, which had attracted criticism from some analysts for not making the best use of cash. Mr Singh defended his decision saying, “The company decided on buyback at a time when the economy was still not falling off the cliff.”
On housing market, Mr Singh said the demand has started picking up. “The worst is over. But I will still be cautious and say that recovery is at least four to five months away,” he said, adding that he didn’t see scope for further price correction.
The Economic Times, May 14, 2009, Page 17
Owners Sell 9.9% In DAL For Rs 3,860 Crore In Open Mkt Transactions
Sanjeev Choudhary & Chaitali Chakravarty, NEW DELHI
DLF, India’s largest real estate company, is looking to raise Rs 10,000 crore in the next 2-3 years through sale of its treasury investments, land parcels and real estate projects, said its vice-chairman Rajiv Singh.
Mr Singh’s family, promoters of the cashstrapped DLF, had sold 9.9% stake in the company on Wednesday for Rs 3,860 crore in open market transactions.
ET Now had first reported on Thursday that DLF promoters were selling stake. Capital group picked up close to 5% stake in DLF, while HSBC, GIC and Fidelity bought smaller stakes. The transactions were done at Rs 230 per share. DLF shares closed marginally down at Rs 234 at NSE on Wednesday.
On the timing of the stake sale, Mr Singh said, “If it was the best or the worst, one would know only in hindsight, but it was surely the right solution in the current circumstances.” DLF had mopped up Rs 9,000 crore in an IPO less than two years ago. The company’s shares had peaked in January 2008, crossing Rs 1,200 but declined to a low of Rs 124 earlier this year.
Mr Singh said he started thinking of the stake sale only a few weeks back, adding a successful qualified institutional placement (QIP) by rival realty firm Unitech too played a part in promoter’s decision to sell stake. “Unitech’s QIP did give a positive signal that investors were interested in buying stocks. It really helped,” he said.
The funds raised through the stake sale will be advanced to privately held promoter group company DLF Assets (DAL), which purchases properties from DLF. Mr Singh said he was still working on the form of fund infusion in DAL, as to whether it will be in the form of equity or some other instrument. The fund infusion in DAL will be used to buy hedge fund DE Shaw’s $400 million (Rs 2,000 crore) investment in DAL and also to pay back to DLF around Rs 1,600 crore.
Besides this, DAL is expecting to raise Rs 2,000 crore in debt through securitising its rental income this year. Together, these fund raising initiatives at DAL will bring down DLF’s receivables from DAL from Rs 4,900 crore to around Rs 1,300 crore.
A panel of independent directors is working on ways to integrate DLF and DAL. DAL will continue to exist as an independent entity, but its ownership may change, Mr Singh said. Therefore, DAL will not be merged with DLF, but may become a subsidiary of DLF.
While elaborating on DLF’s plans to raise Rs 10,000 crore through sale of assets and its portfolio of investments, Mr Singh did not give details of its portfolio of investments, but said negotiations with buyers are currently under way. The company will also sell some of its hotel projects and certain businesses such as wind power to raise the amount.
The sale proceeds will be used to repay part of DLF’s Rs 14,000 crore debt. “Our target is to halve our debt this year,” he said. The assets that will be disposed off are “not contributing revenue in the short-term and are not strategic in the long-term”, he said.
DLF had earlier this month said it would raise Rs 5,500 crore through asset sale in FY10. The company expects to raise Rs 3,500 crore by the beginning of the third quarter this fiscal. The sale of promoter’s stake has come just days after the closure of DLF’s buyback programme, which had attracted criticism from some analysts for not making the best use of cash. Mr Singh defended his decision saying, “The company decided on buyback at a time when the economy was still not falling off the cliff.”
On housing market, Mr Singh said the demand has started picking up. “The worst is over. But I will still be cautious and say that recovery is at least four to five months away,” he said, adding that he didn’t see scope for further price correction.
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