DLF promoters raise Rs3900 cr

DLF promoters have sold 170 million shares at Rs230/share to raise Rs3900 cr. The process, which was being overseen by Deutsche Bank and JP Morgan, started late Tuesday evening and closed before the stock market opened.

Proceeds from the sale are expected to be invested in DLF Assets Ltd (DAL), the promoter-owned real estate trust, which is in the midst of restructuring. Of this, around Rs 2,100 crore will be used to pay hedge fund DE Shaw, which had invested $400 in 2007 through optionally convertible preference shares. The rest will be used to repay part of DAL’s Rs 5,400 crore debt to DLF Ltd.

After the transaction, the promoters’ stake will drop to 78.6 per cent from the current 88.5 per cent. Asked about the sale, DLF Vice-Chairman Rajiv Singh said, “I am not in a position to react because bankers are advising us on the issue.”

Meanwhile, in a separate transaction DLF is expected to acquire DAL for Rs 7,500 crore. This effectively means DAL will have to incur a loss of Rs 2,500 crore, since it acquired assets from DLF for Rs 10,000 crore in 2007-08.

Apart from DE Shaw, DAL raised $700 million from Symphony Capital through optionally convertible preference shares with a coupon rate of 4 to 6 per cent to fund the asset acquisition from DLF.

D E Shaw was assured of an exit route from DAL after a planned listing on the stock exchange in two years. That route has closed since the real estate market has crashed and is unlikely to see a revival of interest from equity investors in the near future.

Although the due diligence of DAL is complete, sources said the transaction would be concluded after DE Shaw is paid. DAL, after getting the fund infusion from promoters is expected to pay off DE Shaw so to conclude the transaction, sources said.