DLF Gets Shareholders’ Nod For Promoters’ Rs 12,000 Crore Stake Sale

Property developer DLF said its shareholders have approved the promoters' decision to sell their entire 40 percent stake in the rental arm for Rs 11,900 crore.

This deal, the biggest in the country's realty space, included the sale of 33.34 percent stake in DLF Cyber City Developers Ltd. (DCCDL) to Singapore's sovereign wealth fund GIC for Rs 8,900 crore and a buyback of the remaining shares worth Rs 3,000 crore by DCCDL.

In a BSE filing, DLF said a special resolution to approve this transaction was passed at the company's AGM held yesterday. As many as 99.96 percent of shareholders voted in favour. The promoters, who hold 75 percent stake in DLF, did not vote on this resolution.

“Institutional investors have overwhelmingly supported this strategic transaction, which will be a game-changer for the company. This will not only remove the conflict of interest and reduce significantly the company's overall debt but create free cash flows,” said Saurabh Chawla, DLF's Senior Executive Director (Finance).

“We intend to create a pure play in our commercial and residential businesses,” he pointed out.

While the residential business will be driven 100 percent by DLF, the commercial segment will be run in a Joint venture with GIC, Chawla said.

Last month, DLF promoters -- K P Singh and family -- had decided to sell their entire 40 percent stake in DCCDL for Rs 11,900 crore and will infuse the net proceeds into DLF for debt repayment.

Post this deal, DLF will have 66.66 percent stake in DCCDL and GIC 33.34 percent in the joint venture.

“Gross proceeds to the promoters from the transaction would be Rs 11,900 crore. The net proceeds to the promoters are estimated to be in excess of Rs 10,000 crore post applicable taxes,” DLF had said earlier.

The promoters intend to infuse a substantial part of the net transaction proceeds into DLF. The deal is expected to get completed by November after all regulatory approvals, including those of the CCI.

DLF expects an infusion of about Rs 13,000 crore into the company, which will help it in reducing the debt significantly from the current borrowing level of Rs 26,000 crore.

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 as the promoters' shareholding will cross the minimum threshold of 75 percent post their infusion of funds.

DLF had a net debt of nearly Rs 26,000 crore at the end of the June quarter and out of that, Rs 5,500 crore related to its rental arm, DCCDL.

DLF Cyber City Developers Ltd. 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 sq. ft. with further development potential of 19 million sq. ft. within the portfolio.