DLF says stake sale to GIC will lead to Rs13,000 crore capital infusion by November

Bengaluru: A stake sale by DLF Ltd’s promoters to an affiliate of Singapore’s sovereign wealth fund GIC Pte Ltd will see capital infusion of nearly Rs13,000 crore into India’s largest property developer, DLF said in an analyst presentation on Sunday.

The infusion, which will take place by November, will see the promoters putting in Rs10,000 crore (as net proceed post tax) and the remaining amount from additional fundraising. The additional fundraising, which DLF termed as a “public capital raise” will probably be through a rights issue, said two analysts who didn’t wish to be named.

On Friday, DLF’s audit committee approved a transaction by which the promoters will sell their stake in its rental arm DLF Cyber City Developers Ltd to Reco Diamond, an affiliate of GIC Real Estate, Singapore, for a gross value of Rs11,900 crore.

The capital infusion is critical for DLF, which has around Rs26,000 crore of debt.

DLF and GIC have entered into a strategic partnership to develop a rental assets portfolio, under the consolidated portfolio of DLF Cyber City, the realty firm said in a statement, adding that “the partnership enables sustainable, long-term growth of DLF Cyber City’s rental business and creates an optimum structure for its rental business to improve efficiency, with long-term capital for growth of the portfolio”.

The transaction implies an enterprise value of Rs35,617 crore for DLF Cyber City, translating into an equity value of around Rs30,200 crore. After the completion of the stake sale, DLF will hold 66.66% in DLF Cyber City. Reco Diamond will own the remaining 33.34%.

“We are excited to enter into, yet another, landmark transaction with GIC,” said Rajiv Singh, vice chairman of DLF. “Going forward, we expect this partnership to unlock significant embedded value in this portfolio and achieve scale and growth to unprecedented levels.”

Lee Kok Sun, chief investment officer, GIC Real Estate, said in a statement: “This portfolio comprises high-quality, income-generating assets which are located across India’s top-tier cities. In addition, there is significant development potential within the portfolio. As a long-term investor, we believe in the growth potential of India and in strengthening relationships with like-minded partners.”

The rental assets arm has 26.9 million sq. ft of leased-out space and an under-development pipeline of about 2.5 million sq. ft, with further development potential of about 19 million sq. ft within its portfolio.