DLF promoters plan DAL listing in 18-24 months

Plan to use proceeds to halve realtor’s debt.

After infusing Rs 3,860 crore into DLF Assets Ltd (DAL) by selling a 9.9 per cent stake in realty major DLF to institutional investors this morning, promoters K P Singh and family plan to list the real estate investment trust in the next 18 to 24 months, Rajiv Singh, vice-chairman of DLF Ltd, said.

The group also plans to nearly halve DLF's debt from Rs 13,958 crore to Rs 7,000 crore by the end of the current financial year by selling around Rs 5,500 crore worth of assets and raising Rs 2,000 crore from the DAL listing, said Singh. Wednesday's divestment will also help reduce DLF's debt by around Rs 1,500 crore since this amount will be given to DAL to repay part of the Rs 4,900 crore it owes the realtor, he added.

DLF's promoters will also use around Rs 2,100 crore of the money from Wednesday's sale to buy out DE Shaw's $400 million investment in DAL that was made in 2007 through optionally convertible preference shares.

DAL is a real estate investment trust wholly owned by the promoters floated to acquire DLF's commercial properties.

DAL had planned to list in Singapore but had to shelve the proposal after the global meltdown.

“Our immediate focus is to integrate DAL with DLF. Its contour will depend upon the reports of the independent committee that was set up by the DLF board to suggest a way forward for integration”, Singh, who is DLF chief K P Singh’s son, said.

DLF’s stake sale, which began late Tuesday night, attracted 35 to 40 buyers, the largest being Capital International, which invested $200 million. HSBC, Fidelity, Euro Pacific Growth Fund and Copthall Mauritius Investment Ltd were the other major buyers through bulk deals on the stock exchange.

Wednesday’s transaction took place at just above Rs 230 per share, 2.6 per cent below yesterday’s closing price and much lower than DLF’s IPO price of Rs 525 a share. Following the announcement, the shares of the company surged 7.89 per cent in early trade.

Meanwhile, DAL is raising Rs 2,000 crore through lease rental discounting (raising debts from banks by mortgaging lease rentals) that will be paid to DLF. After all its repayments, DLF’s total outstanding to DAL will come down to around Rs 1,400 crore.

On the issue of asset sales worth Rs 5,500 crore, Singh said that there was “clear visibility” on realising Rs 3,500 crore and work is in progress for another Rs 2,000 crore.

The company is also aiming to exit some high-cost projects that will release much-needed cash. For instance, the company is looking at exiting the Delhi Convention Centre in Dwarka by returning the land to the Delhi Development Authority. This will help release around Rs 850 crore.

Sources said the company has also approached the Haryana government to refund licence fees of around Rs 900 crore which it has deposited for various projects that were slated to start in near future.