DLF plans Rs3,500 crore QIP, board meet on 1 December
New Delhi: India’s largest realty firm DLF Ltd plans to raise around Rs3,500 crore through sale of shares to institutional investors and the proceeds will be used to cut its net debt. A board meeting has been called on 1 December to approve the proposals to issue shares through qualified institutional placement (QIP) and warrants or debentures to promoters.
DLF is required to launch QIP and also issue of warrants or debentures because of proposed infusion of about Rs10,500 crore by promoters into the company. Infusion of capital by promoters will lead to increase in promoters’ stake in DLF to more than 75%. So, the company plans to launch a QIP to maintain the minimum public shareholding limit of 25%.
In a regulatory filing, DLF informed that board and audit committee will meet on 1 December, 2017 to consider and approve proposal of “issuance of warrants and/or compulsorily convertible debentures on preferential basis” to promoters.
The board will consider and approve proposal of “issuance of equity shares under Qualified Institutions Placement (QIP)” and increase in authorised share capital of the company. According to sources, the size of QIP issue is likely to be Rs3,500 crore and above.
In late August, DLF promoters sold the entire 40% stake in its rental arm DLF Cyber City Developers Ltd (DCCDL) for Rs11,900 crore. This deal included sale of 33.34% stake in DCCDL to Singapore’s sovereign wealth fund GIC for Rs8,900 crore and buyback of remaining shares worth Rs3,000 crore by DCCDL.
Promoters will infuse the net proceeds from this deal, estimated at about Rs10,500 crore into DLF. DLF expects to raise another Rs3,500 crore from proposed QIP, taking the total likely infusion in the company to Rs14,000 crore. It will use this fund to reduce net debt, which has surged to nearly Rs27,000 crore because of huge demand slowdown in the real estate sector since last many years.
Post GIC deal, DLF stake in DCCDL, which holds bulk of the commercial assets with annual rental income of over Rs2,500 crore, will increase from 60% to 66.66%. “We are hopeful of concluding this deal and subsequent infusion of funds into DLF within this fiscal,” DLF’s Senior Executive Director (Finance) Saurabh Chawla had said recently.
The promoters will receive the proceeds this calendar year and will infuse funds into DLF by February 2018, he had said. The deal has already been approved by DLF’s public shareholders as well as fair trade regulator Competition Commission of India (CCI).
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