DLF Shareholders Okay ‘Game-Changer’ Deal Worth Rs. 11,900 Crore

New Delhi: Realty major DLF today said its shareholders have approved the promoters’ decision to sell their entire 40 per cent stake in the rental arm for Rs. 11,900 crore.

This deal, the biggest in the country’s realty space,included sale of 33.34 per cent stake in DLF Cyber CityDevelopers Ltd (DCCDL) to Singapore’s sovereign wealth fund GIC for Rs. 8,900 crore and a buyback of the remaining shares worth Rs. 3,000 crore by DCCDL. In a filing to the BSE, DLF said a special resolution to approve this transaction was passed at the company’s AGM held yesterday. As many as 99.96 per cent of shareholders voted in favour. The promoters, who hold 75 per cent stake in DLF, did not vote on this resolution.

“Institutional investors have overwhelmingly supported this strategic transaction, which will be a game-changer for the company. This will not only remove conflict of interest and reduce significantly the company’s overall debt, but create free cash flows,” DLF’s Senior Executive Director (Finance) Saurabh Chawla told PTI.

“We intend to create a pure play in our commercial and residential businesses,” he pointed out. While the residential business will be driven 100 per cent by DLF, the commercial segment will be run in a JV with GIC, Chawla said.

Last month, DLF promoters — K P Singh and family – had decided to sell their entire 40 per cent stake in DCCDL for Rs. 11,900 crore and will infuse the net proceeds into DLF for debt repayment.

Post this deal, DLF will have 66.66 per cent stake in DCCDL and GIC 33.34 per cent in the joint venture. “Gross proceeds to the promoters from the transaction would be Rs. 11,900 crore. The net proceeds to the promoters are estimated to be in excess of Rs. 10,000 crore post applicable taxes,” DLF had said earlier.

The promoters intend to infuse a substantial part of the net transaction proceeds into DLF. The deal is expected to get completed by November after all regulatory approvals, including those of the CCI.

DLF expects an infusion of about Rs. 13,000 crore into the company, which will help it in reducing the debt significantly from the current borrowing level of Rs. 26,000 crore.

While promoters are expected to invest about Rs. 10,500 crore into the company, DLF expects to raise another Rs. 3,000 crore from institutional investors as the company will have to
hit the capital market as the promoters’ shareholding will cross the minimum threshold of 75 per cent post their infusion of funds.

DLF had a net debt of nearly Rs. 26,000 crore at the end of the June quarter and out of that, Rs. 5,500 crore related to its rental arm, DCCDL.

DLF Cyber City Developers Ltd has rent yielding assets of 26.9 million square feet with annual rental income of over Rs. 2,500 crore. It has an under-development pipeline of 2.5
million sq ft with further development potential of 19 million sq ft within the portfolio.