DLF to approach investors in Feb for promoters stake sale

With its promoters looking to sell 40 per cent stake in a rental arm, realty major DLF will approach the institutional investors this month for the proposed deal, estimated at about Rs 12,000 crore.
DLF announced in October that its promoters will sell their 40 per cent stake in the company's rental arm DLF Cyber City Developers Ltd (DCCDL). The promoters will re-invest a significant part of the amount realised from the sale in DLF.
DLF, the country's largest realty firm, had earlier said that the transactions could be announced by end of this fiscal and deal would get completed in the 2016-17.

In an analyst presentation, DLF gave an update on this proposed stake sale by the promoters, stating that substantial work has been completed by bankers and advisors, in the form of preparation of Information Memorandum and Vendor Diligence.
"The transaction is ready to be shared with the prospective investors within the month of February once all the NDA's (non-disclosure agreements) have been signed. More than 20 NDAs have been signed/confirmed.
"Many prospective institutional investors which include sovereign funds, pension funds and private equity supported by their LP's have evinced interest to participate in the bidding process," the presentation said.

DLF said its strategy is to grow the commercial business, organically and inorganically, in partnership with institutional investors who have a long investment horizon.

"The culmination of the transaction will be an important step to create two 'pure plays' - residential business with zero debt and an independent commercial business in partnership of long term institutional investors," it added.
In late 2009, DLF had announced merger of its subsidiary DCCDL with promoters' firm Caraf Builders and Constructions.
DCCDL had then issued CCPS (compulsorily convertible preference shares) worth Rs 1,597 crore to promoters. Post-- conversion, promoters would have 40 per cent stake in DCCDL, which holds bulk of the DLF's commercial assets.
"With this proposed transaction, DLF will be able to achieve three of its main objectives -- removal of conflict of interest, creation of a rental platform with large financial investors and reducing substantial portion of debt. It's killing three birds with one stone," DLF Senior Executive Director Finance Saurav Chawla had said.

DLF has a commercial portfolio of about 30 million sq ft with an annual rental income of more than Rs 2,500 crore.