DLF Founders Raise $783 Million Selling 9.9 Percent
May 13 (Bloomberg) -- DLF Ltd.'s founders sold a 38.6 billion rupee ($783 million) stake in India's biggest real estate company, raising funds to buy shares in a group venture from D.E. Shaw & Co.
Investment funds controlled by Vice Chairman Rajiv Singh and his family offered the stake, equivalent to 9.9 percent of the New Delhi-based company, according to a sale document sent to investors. Some 168 million shares were sold for 230 rupees apiece, according to data compiled by Bloomberg.
The Singh family, DLF's biggest investor, is selling part of its stake at a time when a slowdown in India's economy has depressed the real estate market. Home prices may have dropped by as much as 40 percent across India in the three months to March 31, according to estimates from Jones Lang LaSalle Inc.
"You'd appreciate that this was a painful and sentimental decision," Singh said in an interview on CNBC-TV18 television. DLF would have preferred to sell shares "when the world was more normal," he said.
DLF gained 3.4 percent to 244.05 rupees at 1:37 p.m. in Mumbai trading, after earlier rising as much as 8.3 percent.
The stock, which fell 61 percent over the past year, gained 80 percent in the past two months on investor optimism that falling borrowing costs and a decline in prices will entice buyers.
Positive
"It's positive for the company and will help it reduce debt and liquidity problems," said U.P. Bhat, who helps manage $1.6 billion at Canara Robeco Asset Management Ltd. in Mumbai. "It'll also restore confidence of banks to lend them more and trigger a positive cycle."
The founders plan to use the proceeds from the sale to raise their stake in DLF Assets Pvt. by acquiring D.E. Shaw's shares in the unit, the company said in a separate statement to the Bombay Stock Exchange. Anil Chawla, chief executive officer at D.E. Shaw India Advisory Services Pvt. declined to comment.
Capital International Inc. bought 5 percent of the shares sold, the largest amount, Singh said in the television interview. Other investors include HSBC Holdings Plc and Fidelity Investments, he said.
Chairman Kushal Pal Singh and his family now own about 78.6 percent in DLF, compared with 88.6 percent as of March 31, the company said. DLF has no immediate plans to sell more shares, Singh said.
The developer sold 175 million shares at 525 rupees apiece to raise 91.9 billion rupees in an initial public offering in June 2007. The founders also reduced their stake from 98.7 percent at that time.
Lehman Brothers
DLF delivered only 5.1 million square feet of space to DLF Assets, compared with an earlier forecast of 9.5 million square feet, after tenants canceled lease agreements, Saurabh Kumar, an analyst at JPMorgan Chase & Co. in Mumbai, said in a note to clients on May 4. He rates the stock as "overweight." DLF Assets owes DLF about 49 billion rupees, he estimated.
In November last year, a fund backed by Lehman Brothers Holdings Inc. sold its stake in DLF Assets to Symphony Capital Partners. Symphony, which holds the stake through a unit, now owns 60 percent of the $1.1 billion investment by overseas firms, Singh said. D.E. Shaw owns about 40 percent, he said at the time.
Deutsche Bank AG and JPMorgan arranged today's sale.
To contact the reporter on this story: Sumit Sharma in Mumbai at sumitsharma@bloomberg.net
May 13 (Bloomberg) -- DLF Ltd.'s founders sold a 38.6 billion rupee ($783 million) stake in India's biggest real estate company, raising funds to buy shares in a group venture from D.E. Shaw & Co.
Investment funds controlled by Vice Chairman Rajiv Singh and his family offered the stake, equivalent to 9.9 percent of the New Delhi-based company, according to a sale document sent to investors. Some 168 million shares were sold for 230 rupees apiece, according to data compiled by Bloomberg.
The Singh family, DLF's biggest investor, is selling part of its stake at a time when a slowdown in India's economy has depressed the real estate market. Home prices may have dropped by as much as 40 percent across India in the three months to March 31, according to estimates from Jones Lang LaSalle Inc.
"You'd appreciate that this was a painful and sentimental decision," Singh said in an interview on CNBC-TV18 television. DLF would have preferred to sell shares "when the world was more normal," he said.
DLF gained 3.4 percent to 244.05 rupees at 1:37 p.m. in Mumbai trading, after earlier rising as much as 8.3 percent.
The stock, which fell 61 percent over the past year, gained 80 percent in the past two months on investor optimism that falling borrowing costs and a decline in prices will entice buyers.
Positive
"It's positive for the company and will help it reduce debt and liquidity problems," said U.P. Bhat, who helps manage $1.6 billion at Canara Robeco Asset Management Ltd. in Mumbai. "It'll also restore confidence of banks to lend them more and trigger a positive cycle."
The founders plan to use the proceeds from the sale to raise their stake in DLF Assets Pvt. by acquiring D.E. Shaw's shares in the unit, the company said in a separate statement to the Bombay Stock Exchange. Anil Chawla, chief executive officer at D.E. Shaw India Advisory Services Pvt. declined to comment.
Capital International Inc. bought 5 percent of the shares sold, the largest amount, Singh said in the television interview. Other investors include HSBC Holdings Plc and Fidelity Investments, he said.
Chairman Kushal Pal Singh and his family now own about 78.6 percent in DLF, compared with 88.6 percent as of March 31, the company said. DLF has no immediate plans to sell more shares, Singh said.
The developer sold 175 million shares at 525 rupees apiece to raise 91.9 billion rupees in an initial public offering in June 2007. The founders also reduced their stake from 98.7 percent at that time.
Lehman Brothers
DLF delivered only 5.1 million square feet of space to DLF Assets, compared with an earlier forecast of 9.5 million square feet, after tenants canceled lease agreements, Saurabh Kumar, an analyst at JPMorgan Chase & Co. in Mumbai, said in a note to clients on May 4. He rates the stock as "overweight." DLF Assets owes DLF about 49 billion rupees, he estimated.
In November last year, a fund backed by Lehman Brothers Holdings Inc. sold its stake in DLF Assets to Symphony Capital Partners. Symphony, which holds the stake through a unit, now owns 60 percent of the $1.1 billion investment by overseas firms, Singh said. D.E. Shaw owns about 40 percent, he said at the time.
Deutsche Bank AG and JPMorgan arranged today's sale.
To contact the reporter on this story: Sumit Sharma in Mumbai at sumitsharma@bloomberg.net
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