GIC Seeks CCI Nod For Rs 9,000 Crore Deal With DLF Promoters
DLF expects to raise another Rs 3,000 crore from institutional investors
Singapore’s sovereign wealth fund GIC has approached fair trade regulator, Competition Commission of India, seeking approval for its deal to acquire stake in DLF Ltd.’s rental arm for Rs 8,900 crore and form joint venture with the realty firm.
GIC had in late August agreed to buy 33.34 percent stake in DLF Cyber City Developers Ltd. (DCCDL) for Rs 8,900 crore. GIC will buy shares in DCCDL from DLF promoters.
GIC has approached the CCI to get approval for this deal, people with knowledge of the matter said. The deal is expected to be approved by next month, they added.
DLF last week got shareholders approval for promoters’ decision to sell their entire 40 percent stake in the rental arm for Rs 11,900 crore.
The deal includes sale of 33.34 percent stake in DCCDL to GIC for Rs 8,900 crore and a buyback of the remaining shares worth Rs 3,000 crore by DCCDL. Post this deal, DLF will have 66.66 percent stake in DCCDL and GIC 33.34 percent in the joint venture.
Institutional investors have overwhelmingly supported this strategic transaction, which will be a game-changer for the company. This will not only remove conflict of interest and reduce significantly the company’s overall debt, but create free cash flows.Saurabh Chawla, Senior Executive Director (Finance), DLF
“We intend to create a pure play in our commercial and residential businesses,” Chawla said. While the residential business will be driven 100 percent by DLF, the commercial segment will be run in a JV with GIC, he added.
DLF promoters, KP Singh and family, will infuse the net proceeds into DLF for debt repayment.
While promoters are expected to invest about Rs 10,500 crore into the company, DLF expects to raise another Rs 3,000 crore from institutional investors as the company will have to hit the capital market to maintain promoters shareholding at 75 percent post their infusion of funds.
DLF would use this Rs 13,500 crore to repay its debt that stood at nearly Rs 26,000 crore at the end of the June quarter.
DLF Cyber City Developers has rent yielding assets of 26.9 million square feet with annual rental income of over Rs 2,500 crore. It has an under-development pipeline of 2.5 million square feet with further development potential of 19 million square feet within the portfolio.
