Mumbai

DLF's 40% stake sale in rental arm to GIC enters final lap

The deal between the country's largest realty developer DLF and Singapore's sovereign wealth fund GIC for a 40% stake in DLF Cyber City Developers (DCCDL) is in the final stages of conclusion.

DLF made it known to analysts on Sunday that the stake sale, estimated to be valued at $2 billion (around Rs 13,000 cr), will soon be placed before the audit committee for their approval. Promoters of DLF have entered into an exclusive agreement with GIC to sell their 40% stake in the rental arm DCCDL, which operates a portfolio of nearly 27 mln sqft of completely leased out commercial properties.

It was in October 2015 that DLF had first announced its promoters' plan to sell their stake in DCCDL. The deal value was then estimated at Rs 12,000-14,000 cr. The plan is to reinvest a substantial chunk of the proceeds in the company to help reduce the total debt burden.

On Saturday, the developer reported a 58.4% year-on-year slide in its first-quarter net profit at Rs109 cr. Total income from operations rose 9% to Rs 2,211.24 cr. Its finance cost during the June quarter rose nearly 5% from a year earlier to Rs 782.66 cr.

At the end of June quarter, DLF's consolidated net debt stood at Rs 25,898 cr. “Continued capex in new office complexes and construction spend on residential spend shall result in temporary spike in net debt levels for which financing is already in place,” DLF said in its investor presentation.

The stake sale had initially attracted interest from around 25 investors and the list was then shortened to six entities.

However, in February 2016, in the backdrop of weak market conditions, DLF extended the deadline by deferring conversion of the compulsorily convertible preference shares to promoters until March 18, 2017 with the same terms and conditions.

Written by The Realty Paper


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