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Indian Real Estate News : Delhi NCR
DLF plans to raise Rs 2,100 crore by selling 8.1 crore shares to institutional buyers as institutional placement programme
Source: ET Bureau Feb 04, 2013
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DLF, India's largest real estate developer plans to raise Rs2,100 crore by selling 8.1 crore shares to qualified institutional buyers - known in market parlance as institutional placement program (IPP) - by April.

The move is in line with guidelines stipulating 25% public shareholding. The fund raising will also help reduce the realtor's debt, a company official said. The issue will be the largest fund raising in India through IPP. "The company is going to take board approval in a few weeks," the official said. "We have begun discussion with merchant bankers and are likely to appoint three or four bankers soon."

"The pricing will be decided in April. In any case, it will be either at the prevailing market price or at a discount of 5%, as permitted under the IPP guidelines," the official said.

The company, promoted by Kushal Pal Singh and family, can raise Rs2,175 crore at Friday's closing price at Rs267.95 per share on BSE. The company commands a market value of Rs45,514 crore. The promoters, who own 78.58% of the company, will trim their stake to 75% after the issue. "The company will abide by the Sebi directives with regard to the Public Float requirements within the stipulated time frame," DLFBSE 1.96 % spokesperson said. "The requisite dilution to meet the Public Float guidelines will be done through a fresh issue of equity shares and will be compliant with the requisite Sebi guidelines in that regard," he added.

In August 2010, market regulator Securities Exchange Board of India (Sebi) had asked 193 listed companies to reach a minimum public shareholding of 25% by June 2013. Unlike the Offer-for-Sale (OFS) route, IPP norms are broadly similar to qualified institutional placement (QIP) under which companies issue fresh shares. However, institutional placement program has certain limitations.

The shares issued through IPP route cannot be priced at a discount of more than 5%. Further under the institutional placement programme route, a company is allowed to dilute only 10% in one transaction. In case of Offer-for-Sale , however, there is no restriction on the discount or quantum of divestment as promoters are selling their own shares.

"Given the response in some of the recent large-ticket transactions such as NMDCBSE -1.29 % and Oil India BSE 2.62 % (OIL), it seems that the appetite for good quality companies is strong but pricing is critical to the success of the issue," said a top banker with a foreign bank, who has pitched for the mandate.

"The successful fund raising by Bangalore-Prestige Estate in January last week established that the overseas investors are no longer averse to investing in a good quality real estate firm," said the banker. DLF has been trying to cut its heavy debt which the company has incurred to purchase land banks, build hotels and develop real estate across the country.

The company, which raised Rs9,200 crore through a public offer in June 2007, hadRs23,000 crore of debt. The company, which owns the largest real estate land bank of 10,255 acres, had raised Rs6,000 crore in fiscal 2012 by selling wind mills, hotels and parcels of land in Mumbai to pare debt to Rs18,000 crore. "Going forward the fund raised in April will help us to bring it down to aboutRs16,000 crore level early next fiscal, which is a comfortable level" said another official.

Tag: real estate of india, delhii real estate, DLF
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