DLF gets apex court nod to raise Rs 12,000 cr

DLF plans to raise the money by selling promoter's stake in its rental arm

Real estate major DLF can now work to its plan and raise Rs 12,000 crore by selling the promoters’ stake in its rental arm DLF Cyber City Developers. The Supreme Court on Wednesday refused to stay the company’s proposed move to raise money through stake sale.  

The Securities and Exchange Board of India (Sebi) had moved the apex court, seeking to restrain DLF from selling its stake. The bench, headed by J Chellameshwar, was not convinced about the regulator’s October 2014 order barring DLF and its top executives from such transactions, according to agencies.

Sebi argued that since its order specified DLF could not access the market or deal in securities directly or indirectly, the move amounted to indirect market access. While the court declined immediate relief for Sebi, it did not dismiss the appeal but said it could be listed along with the main appeal against the Securities Appellate Tribunal (SAT) order pending in court.

SAT had by a majority decision set aside the Sebi order to ban the realtor and its top executives for alleged disclosure violations in its 2007 IPO. In October, the DLF board had approved plans to sell stakes in DLF Cyber City Developers, its rental subsidiary, aiming to reduce debt. DLF Cyber City Developers has a rental portfolio of 30 million sq ft.

According to the plan, K P Singh and his family, promoters of DLF, would sell their 40 per cent stake in DLF Cyber City Developers to institutional investors. The stake is estimated to be worth Rs 12,000-14,000 crore.

The promoters were planning to reinvest a significant part of the amount raised through the sale into DLF. The promoter stake in DLF stands at 75 per cent.

DLF has appointed JPMorgan and Morgan Stanley as merchant bankers for proposed sale, PricewaterhouseCoopers as tax consultant and Shardul Amarchand Mangaldas as legal consultant for the deal.  When contacted, a DLF spokesperson said, “We are heartened by the development. However, we will wait to study the order before issuing a detailed reaction.”

DLF’s net debt increased by Rs 922 crore during the September quarter to Rs 22,520 crore. In an analyst presentation, DLF said its net debt stood at Rs 22,520 crore on September 30, up from Rs 21,598 crore at the end of June.

RAISE THE STAKES

Oct 2015: DLF Board approves plan of raising funds by selling 40% promoters stake in rental arm, stake valued at around Rs 12,000-14,000 crore

• Sebi moves SC against DLF plan of selling stake, cites earlier Sebi order which specified that DLF cannot access the market or deal in securities either directly or indirectly

Nov 2015: SC refuses to stay DLF's plan but didn't dismiss Sebi plea and said can be listed along with main appeal against SAT order which is pending in the court. SAT had by a majority decision set aside the Sebi order to ban the realtor and its top executives for alleged disclosure violations in its 2007 IPO from raising money from the markets