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DLF shares soar, windfall for Capital Research, Deutsche Bank

DLF shares soar, windfall for Capital Research, Deutsche Bank
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First Published: Sat, May 23 2009. 12 57 AM IST

Good sign? DLF vice-chairman Rajiv Singh. The stake sold by his family on 13 May is now worth Rs5,750 crore. Harikrishna Katragadda / Mint
Good sign? DLF vice-chairman Rajiv Singh. The stake sold by his family on 13 May is now worth Rs5,750 crore. Harikrishna Katragadda / Mint
Updated: Sat, May 23 2009. 12 57 AM IST
New Delhi: Investors such as Capital Research Management Co. and Deutsche Bank AG have made a $401 million (Rs1,892.72 crore) paper profit buying DLF Ltd stock from the founders of India’s biggest developer last week before a record rally in stocks.
A unit of Deutsche Bank, Capital Management, Copthall Mauritius Investment Ltd and other funds bought a 9.9% stake in DLF on 13 May for Rs3,860 crore, according to the Bombay Stock Exchange’s website.
Good sign? DLF vice-chairman Rajiv Singh. The stake sold by his family on 13 May is now worth Rs5,750 crore. Harikrishna Katragadda / Mint
The stake sold by vice-chairman Rajiv Singh’s family that day is now worth Rs5,750 crore, according to data compiled by Bloomberg. DLF’s stock rallied 28% this week as investors bet Prime Minister Manmohan Singh, who’s starting a second term unencumbered by Communist allies, will begin reforms that revive economic growth and bolster demand for new homes.
“The government is strongly encouraging state-owned banks to increase the credit limit to core sector companies, including construction and real estate, which is a good sign for the cash-strapped real estate sector,” said R.K. Gupta, who oversees about $127 million in equities at Taurus Asset Management Co. Ltd in New Delhi. “DLF’s stake sale to large foreign investors has also given some confidence to retail investors in India.”
DLF shares gained 47% in the first two days of this week, after a vote tally on 16 May showed Manmohan Singh’s Congress party led coalition as the winner in the national elections. The stock soared 40% to Rs342.45 as of Thursday from its 12 May close, the day before Rajiv Singh’s family sold the stake.
The investments by Deutsche and Capital Management have also benefited from a rally in India’s currency as the rupee climbed to a five-month high, and is headed for the biggest weekly advance in 12 years.
Capital Research EuroPacific Growth Fund bought almost 55.3 million shares in DLF for Rs12.7 billion, according to the Mumbai exchange’s website. At Thursday’s closing price, that stake was worth Rs1,890 crore. Chuck Freadhoff, a Los Angeles-based spokesman for Capital Group, declined to comment in an email on the firm’s stake in DLF.
Copthall Mauritius bought 20.1 million shares for Rs462 crore, while Deutsche Securities Mauritius Ltd bought 16.3 million shares for Rs374 crore, according to the exchange. The other buyers weren’t named on the site.
Sanjey Roy, a DLF spokesman, declined to name the remaining buyers or comment on whether they are barred from selling the stake for a certain period.
Deutsche Bank and JPMorgan Chase and Co. arranged the 13 May sale of 168 million shares by the founding family for Rs230 apiece. Deutsche Bank’s Mumbai-based spokesman Linus Chettiar declined to comment.
DLF chairman K.P. Singh and his family now own about 78.6% of the stock, compared with 88.6% as of 31 March, the company said. The founders have no immediate plans to sell more shares, Rajiv Singh has said.
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First Published: Sat, May 23 2009. 12 57 AM IST