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Rental arm stake sale to boost DLF's realty business: Advisory firm ISS

This deal, biggest in the country's realty space, included sale of 33.34% stake to GIC for Rs 8,900 cr

Press Trust of India  |  New Delhi 


promoters' decision to sell their entire stake in its rental arm for Rs 11,900 crore will remove existing conflicts of interest and help the realty firm in the growth of commercial real estate business in partnership with Singapore's GIC, investment advisory firm ISS said.

Last month, promoters sold their 40 per cent stake in Cyber City Developers Ltd (DCCDL) for Rs 11,900 crore. The promoters will infuse net proceeds into Ltd for debt repayment.

This deal, the biggest in the country's realty space, included sale of 33.34 per cent stake to GIC for Rs 8,900 crore and a buyback of remaining worth Rs 3,000 crore by DCCDL.

has sought shareholders' nod for this deal at the annual general meeting to be held on September 29.

In a report, ISS said that there are two key developments arising from this

Firstly, it said "the promoters of the company will exit DCCDL, thereby removing existing conflicts of interest in the ownership of DCCDL".

Further, it said would have "a long term strategic partner (GIC) to pursue the growth and development of the group's rental business."

ISS concluded that this "resolution warrants shareholder support" based on strategic rationale of the and in the absence of any known issues concerning the proposal.

Promoters are expected to raise about Rs 12,000 crore and will invest bulk of the net proceeds in through subscription of and/or convertible securities, ISS said, adding that a separate shareholder meeting would be held to consider the manner of such private equity placement.

The research report included a recommendation against the election of G S Talwar as director, saying that "he attended less than 75 percent of board and committee meetings over the most recent fiscal year, without a satisfactory explanation".

Singapore's sovereign wealth fund GIC will have to seek approval of fair trade regulator CCI for this deal. Post conclusion of this deal, DLF's stake will increase to 66.66 per cent from the current 60 per cent.

had earlier said that it expects an infusion of Rs 13,000 crore into the company, a better part from promoters, by December and the amount will be utilised for reducing its debt substantially.

The company expects over Rs 10,000 crore from promoters and another Rs 3,000 crore from institutional investors.

had a net debt of nearly Rs 26,000 crore at the end of the June quarter, out of which Rs 5,500 crore pertained to its rental arm Cyber City Developers Ltd (DCCDL).

ISS research team provides comprehensive proxy analysis and complete vote recommendations for approximately 40,000 meetings annually in around 117 markets worldwide.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sun, September 24 2017. 13:42 IST