DLF plans June listing of DAL

DLF plans June listing of DAL
The Financial Express, December 03, 2009, Page 1

Rajat Guha, New Delhi

The promoters of DLF, the country’s largest real estate firm, have finally firmed up plans to list their real estate investment trust (Reit) firm, DLF Assets Ltd, in Singapore in June 2010, to raise about $1.2 billion. DAL, wholly-owned by the K P Singh family, buys commercial property from DLF and collects lease rentals from it.

Company officials said the listing decision is based on an assessment that the Singapore market has begun moving North and so it made sense to list DAL around the middle of next year. Also, the firm has no option but to expedite the listing as one of its PE investors, Symphony Capital, wants to cash its investment in DAL. If the listing is not done and Symphony, like DE Shaw before it, wants to exit, the promoters would have no option but to sell a portion of their stake as they did in May this year.

The London-based Symphony has invested around $400 million in DAL in May 2008.

Sources close to the planning process said DLF has already begun talks with merchant bankers, including the Singapore-based DBS as well as Citibank and has set a June window for the listing. The company has decided to file for a listing with the Singapore Stock Exchange in January.

DAL had earlier planned to list in Singapore but had to shelve the plan following the global meltdown.

After two straight quarters of growth, Singapore has projected that its economy would expand by up to 5% in 2010. Coupled with this, the Reit market in the country is also looking up.

When contacted a DLF spokesperson said, “We would not comment on market speculation”.

In May, the promoters had sold 9.9 % of their stake in the company to institutional investors to raise Rs 3,860 crore. After that the promoters’ stake had come down from 88.5% to 78.6%.

Part of the proceeds was to pay off DE Shaw, which had invested $400 million in DAL. While the exact break-up is not known, DLF is likely to pay around Rs 2,200 crore to DE Shaw for buying out its stake in DAL and the remaining will be injected directly into DAL which, in turn, will use the proceeds to pay DLF towards its contractual obligations. DAL owes around Rs 5,000 crore to DLF.

DLF’s profit has fallen for five straight quarters, and the September quarter profit was almost half that of a year earlier. The company has net debt of over Rs 12,000 crore on its books at the end of the September quarter.

DAL buys commercial real estate from DLF at market price and then leases it out. DAL had been buying assets from DLF in the past, but the realty firm has lately suspended sales to DAL since Q3 FY09.