DLF, the country’s largest listed realty company, on Monday received a clearance from the Securities and Exchange Board of India (Sebi) to go ahead with the buyback of its equity shares, the announcement for which was made in July.
DLF had announced its Rs 1,100-crore plan to buy back shares from existing shareholders at a price not exceeding Rs 600 a share. After the offer, the shareholding of the promoters would increase from 88.16 per cent to 89.32 per cent.
DLF had filed an application under Regulation 4(2) of Sebi (Substantial Acquisition of Shares and Takeovers) Act to seek an exemption from the open offer. Sebi has already exempted IT and infrastructure companies with promoter shareholding exceeding 75 per cent from the mandatory open offer. “DLF had just sought this as a precautionary measure,” said an investment banker.
In a letter to Sebi in July, DLF said that “the proposed buyback would not result in the violation of the conditions of continuous listing norms specified in Clause 40A of the listing agreement entered into between the company and the stock exchange”. According to Clause 40A of the listing agreement, if a company’s public shareholding drops below 10 per cent, it has to buy back all its shares from the public and delist from the exchange.
The company has further said that the promoters would not participate in the buyback offer and is expected to contribute to the overall enhancement of shareholder value, “resulting in an increase in the return on equity of the target company”.
The Takeover Panel subsequently recommended the grant of exemption sought by DLF. The order, which was passed by Sebi wholetime member KM Abraham, has exempted the company from the open offer.
When contacted, a company spokeperson declined to comment on the timeline of the offer. According to Sebi guidelines, the company has to buyback the shares within one year of Sebi clearance.
