DLF promoters to sell 33% stake in rental arm to GIC for Rs8,900 cr
26 Aug 2017
DLF promoters will sell their entire 40 per cent stake in the company's rental arm for Rs11,900 crore, including sale of 33 per cent stake worth Rs8,900 crore to Singapore government-owned sovereign wealth fund GIC.
DLF promoters - K P Singh and family - would sell 33.34 per cent stake in DLF Cyber City Developers Ltd (DCCDL) to GIC for Rs8,900 crore while DCCDL, in turn, will buy back the remaining shares worth Rs3,000 crore.
DLF promoters are expected to get net proceeds of over Rs10,000 crore after tax and a substantial part of this amount will be invested in DLF Ltd for repayment of debt that has touched nearly Rs26,000 crore.
In a filing with the Bombay Stock Exchange (BSE), DLF, India's largest realty firm, today said its board has approved the share purchase and shareholders agreement with GIC affiliate Reco Diamond, promoters and the DLF Cyber City Developers.
The entire proceeds, after paying requisite taxes, will be used to reduce the developer's debt.
While 33.3 per cent will be sold to GIC, the remaining 6.66 per cent stake will be bought back by DCCDL. The first repurchase will happen before the closing of the GIC deal and the other a year later, DLF said in a regulatory filing.
The transaction was approved at the DLF board meeting late on Friday. The two sides had in May entered into exclusive talks for a deal for DLF's rental unit that operates nearly 27 million sq ft of commercial properties. The entire space is leased out.
In the current financial year, DLF's rental income is estimated to be more than Rs3,000 crore, of which around Rs2,600 crore is expected to be generated through DCCDL.
DLF had consolidated net debt of Rs25,898 crore as of end-June. For the quarter ended June, the company reported a more than 58 per cent year-on-year drop in net profit at Rs109 crore. Total income from operations rose 9 per cent to Rs2,211.24 crore, while finance cost grew nearly 5 per cent.
The Singapore fund had earlier invested Rs1,990 crore for a 50 per cent stake in the developer's two residential projects in Delhi.
The latest monetisation would still leave DLF with a net debt of Rs16,000 crore.