India’s largest realty firm DLF has called a board meeting on December 1 to approve its proposals to issue equity shares to institutional investors and warrants or debentures to promoters. DLF is required to launch QIP (qualified institutional placement) and also issue of warrants or debentures because of proposed infusion of about Rs 10,500 crore by promoters into the company. Infusion of capital by promoters would lead to increase in promoters stake in DLF to more than 75 per cent. So, the company will have to launch a QIP to maintain the minimum public shareholding limit of 25 per cent. In a regulatory filing, DLF informed that board and audit committee will meet on December 1, 2017, to consider and approve proposal of “issuance of warrants and/or compulsorily convertible debentures on preferential basis” to promoters.
The board will also consider and approve proposal of “issuance of equity shares under Qualified Institutions Placement (QIP)” and increase in authorised share capital of the company. The board decision would be subject to the approval of the shareholders.
In late August, DLF promoters sold the entire 40 per cent stake in its rental arm DLF Cyber City Developers Ltd (DCCDL) for Rs 11,900 crore. This deal included sale of 33.34 per cent stake in DCCDL to Singapore’s sovereign wealth fund GIC for Rs 8,900 crore and buyback of remaining shares worth Rs 3,000 crore by DCCDL. Promoters would infuse the net proceeds from this deal, estimated at about Rs 10,500 crore into DLF.
DLF expects to raise another Rs 3,000 crore from proposed QIP, taking the total likely infusion in the company to Rs 13,500 crore. The realty major would use this fund to reduce its net debt, which has surged to nearly Rs 27,000 crore because of huge demand slowdown in the real estate sector from last many years. Post GIC deal, DLF stake in DCCDL, which holds bulk of the commercial assets with annual rental income of over Rs 2,500 crore, will increase from 60 per cent to 66.66 per cent. DLF expects the sale of its promoters’ stake to GIC to be concluded by December and infusion of proceeds into the company by February 2018.
The deal has been approved by DLF’s public shareholders as well as fair trade regulator CCI. “We are hopeful of concluding this deal and subsequent infusion of funds into DLF within this fiscal,” DLF’s Senior Executive Director (Finance) Saurabh Chawla had said recently. The promoters will receive the proceeds this calendar year and will infuse funds into DLF by February 2018, he had said.
DLF shares were trading 0.72 per cent down at Rs 228.55 on BSE in morning session.