GIC, a global investment firm of Singapore, is soon to sign a deal with DLF Limited to buy its 40 per cent of stake in DLF’s rental arm DLF Cyber City Developers Limited (DCCDL). The decision is in the exclusive bilateral negotiations with KP Singh and his family who are promoters of DLF.
With this agreement, the DLF promoters are able to raise approximately Rs 12,000 crore enhancing the value of the rental arm to about Rs 40,000 crore. Most of the percentage of this new fund will be used in subscribing to a Rs 10,000-crore preferential issue of DLF Limited by purchasing shares from various Indian real estate developers. Also, the company has planned to raise around Rs 3,000 crore from several institutional investors.
The total Rs 13,000 crore will be utilised to pay some portion of DLF’s debt which is now at the mark of Rs 11,000 crore. The debt will remain at DLF Limited’s book as the company owns 60 per cent.
“DLF has been running operational cash flow deficit of Rs 5-6 billion (Rs 500-600 crore) per quarter due to a slowdown in sales and continued construction spend (Rs 6.5-7 billion per quarter). With sales expected to remain muted, the company does not expect the gap to close in coming quarters.” Axis Securities’ analysts wrote in a report in December.
Reportedly, GIC has included Blackstone and a consortium of sovereign wealth funds from Abu Dhabi and Qatar in order to make DLF a business partner and almost 15 suitors are interested in joining DLF as a partner.
Source: ET Realty