DLF rental arm stake sale likely to be concluded by September2 min read . Updated: 31 Jul 2016, 06:23 PM IST
Blackstone, GIC and Abu Dhabi Investment Authority shortlisted for deal which is estimated to fetch around `12,000 crore for DLF
New Delhi: Realty major DLF’s promoters are likely to sell 40% stake in its rental arm, DLF Cyber City Developers Ltd (DCCDL) by September.
People with knowledge of the matter said three global institutional investors have been shortlisted as buyers in DCCDL: Blackstone, GIC and Abu Dhabi Investment Authority.
The due diligence for the deal, estimated to fetch around ₹ 12,000 crore, is on.
DLF’s billionaire promoter K.P. Singh and his family will reinvest a significant part of the amount realised from the sale in DLF Ltd.
The realty major had announced in October last that its promoters would sell 40% stake in DCCDL, which holds the bulk of office and retail complexes.
DLF would, however, continue to own the remaining 60% stake in DCCDL.
In April, DLF’s bankers had circulated the information memorandum to 18-20 global institutional investors that had been keen to purchase this stake.
As per the memorandum, DCCDL has about 25-26 million sq. ft of leased commercial space with an annual rental income of about ₹ 2,250 crore.
DCCDL also has 20 million sq. ft of future development potential. Of the DLF’s total net debt of ₹ 22,202 crore, DCCDL’s share was at ₹ 12,325 crore in the last fiscal. “With this proposed transaction, DLF will be able to achieve three of its main objectives—removal of conflict of interest, creation of a rental platform with large financial investors and reducing substantial portion of debt," DLF’s senior executive director, finance, Saurabh Chawla, had said in October.
While announcing the annual result in May, DLF had said the intent of the transaction is to create a platform in partnership with long term institutional investors to own and develop commercial assets.
“Grow the commercial business, organically and inorganically, and target high equity returns for the shareholders; it shall be a precursor to setting up of REITs (Real Estate Investment Trust) in the medium term," DLF had said in a presentation.
The deal will be an important step to “create two pure plays—residential business with zero debt and an independent commercial business".
Singapore’s sovereign wealth fund GIC had invested ₹ 1,992 crore last year to acquire 50% stake in two of DLF’s new projects in Delhi.
Recently, DLF restructured its joint venture with Blackstone-managed Ridgewood Holdings that had invested ₹ 1,481 crore in seven housing projects in 2007.
The partners had divided five undeveloped land parcels of about 500 acres in Bengaluru and Chennai.
DLF has a land bank of 281 million sq. ft, of which 37 million sq. ft is under construction. The company had posted a net profit of ₹ 549.39 crore over a turnover of ₹ 9,259.86 crore in the last fiscal.