DLF to sell 40% in DLF Cyber City Developers for a reported $2 bn
02 March 2017
K P Singh and his family, promoters of India's largest commercial real estate developer DLF Ltd, today struck a deal to sell their entire 40-per cent stake in DLF Cyber City Developers (DCCDL) to Singapore sovereign wealth fund government of Singapore Investment Corporation (GIC) for an undisclosed sum.
Although both DCCDL and GIC did not reveal the financial terms of the deal, several media pegged the deal size at around Rs14,000 crore ($2 billion).
DLF had in October 2015 announced that three shareholders in DLF Cyber City Developers, who are among its founder directors, would look to sell their combined 40-per cent stake to reduce conflict of interest.
In a filing with the BSE, DLF said, "The board of directors had approved the proposal for promoter group companies namely Rajdhani Investment and Agencies Private Ltd, Buland Consultants and Investments Private Ltd, Sidhant Housing and Development Company (CCPS Holder) to sell 15,96,99,999 cumulative compulsorily convertible preference shares of DLF Cyber City Developers Ltd (DCCDL) (which would result in 40% equity shareholding in DCCDL upon conversion of the CCPS), to unrelated third party institutional investors (the Transaction) subject to certain conditions."
"After deliberating on the advice of Bankers and Legal Advisors to the process, and with due consultations with sellers, the Audit Committee approved entry into the next phase of the process to negotiate definitve transaction documents, and execution of an Exclusivity Agreement with an affiliate of GIC Singapore for this purpose," the statement added.
K P Singh and his family hold 40-per cent stake in DCCDL, while and the rest is owned by DLF.
The deal will give DLF a partner to expand its commercial renting business, improve its credibility and help it to fundamentally restructure its debt-laden balance sheet.
According to media reports, the promoters will invest the proceeds from the sale in DLF and increase their stake to over 75 per cent from the present 74.9 per cent.
DLF is expected to use the money to repay part of its debt of Rs24,397 crore, the reports added.
While the debt will come down substantially, DLF is also discussing ways of getting more money flow into the company once the transaction is complete, the firm's chief financial officer Ashok Tyagi said.
As of end-December, DCCDL had nearly 30 million square feet of leased space, including information technology parks and malls in the suburbs of New Delhi. It expects its revenue for the year to March to be about Rs2,700 crore ($404 million).