New Delhi: Contrary to an earlier declaration, hedge fund DE Shaw and Co. Lp. may stay invested in DLF Assets Ltd, or DAL, an affiliate of India’s largest listed realty firm.
Rising shares: DLF vice-chairman Rajiv Singh. Harikrishna Katragadda / Mint
DLF Ltd vice-chairman Rajiv Singh and his wife Kavita sold 9.9% of their stake in the realtor around three weeks ago to raise Rs3,800 crore, of which roughly Rs2,200-2,400 crore was to be used to buy out DE Shaw’s investment.
DAL was set up by DLF’s founding Singh family. It buys and holds completed commercial assets of DLF. In 2007, DE Shaw had invested $400 million (around Rs1,910 crore) in DAL and currently holds compulsory convertible preference shares of the company. People familiar with the development said DE Shaw’s put option to sell its stake in DAL lapsed on 22 May.
Much of the proceeds from the promoters’ stake sale are now likely to be used to reduce DLF’s receivables from DAL, the people said. DAL owes Rs4,930 crore to DLF as payment for the properties it bought.
It is still not known why exactly DE Shaw is having second thoughts on the sale of its stake. Some industry experts say this could be a result of DE Shaw turning bullish on the property market. “So, instead of just receiving the principal amount, DE Shaw might be looking at a healthy return next year,” said an analyst at a leading brokerage firm, who did not want to be identified.
Another analyst, who also did not want to be identified, said the appreciating share price of DLF might have also resulted in DE Shaw changing its mind. DLF shares have gained at least 50% since the stake sale.