DLF’s Rs 8,900 cr deal with GIC gets Competition Commission nod

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New Delhi | Published: November 5, 2017 7:39:23 PM

Fair trade regulator CCI has approved Singapore's sovereign wealth fund GIC's proposal to acquire 33 per cent stake in realty major DLF's rental arm DCCDL for Rs 8,900 crore.

DLF, DLF deal, DLF deal with GIC, DLF deal with GIC gets Competition, Competition Commission nod, DLF rental arm DCCDL, DLF Cyber City DevelopersFair trade regulator CCI has approved Singapore’s sovereign wealth fund GIC’s proposal to acquire 33 per cent stake in realty major DLF’s rental arm DCCDL for Rs 8,900 crore. (Image: Reuters)

Fair trade regulator CCI has approved Singapore’s sovereign wealth fund GIC’s proposal to acquire 33 per cent stake in realty major DLF’s rental arm DCCDL for Rs 8,900 crore. GIC had in late August agreed to buy 33.34 per cent stake in DLF Cyber City Developers Ltd (DCCDL) for Rs 8,900 crore. GIC will buy shares in DLF Cyber City from DLF promoters. GIC had approached the Competition Commission of India (CCI) to approve this deal and enable formation of joint venture with the real estate firm. Post this deal, DLF will have 66.66% stake in DLF Cyber City. Under the deal, GIC’s subsidiary Reco Diamond will acquire shares in DCCDL from promoters. In a BSE filing, DLF yesterday said that the CCI has issued a letter to GIC which states that the regulator has approved the deal.

“Pursuant to an application made by the Investor, the CCI has issued a letter dated November 3, 2017 to the Investor which states that the CCI… considered the proposed combination and approved the same under Section 31(1) of the Competition Act, 2002. The detailed order of CCI in this regard will follow,” the filing said. The CCI approval will pave the way for completion of this deal. DLF has already got shareholders approval for promoters’ decision to sell their entire 40 per cent stake in the rental arm for Rs 11,900 crore. This deal included sale of 33.34 stake in DLF Cyber City to GIC for Rs 8,900 crore and a buyback of the remaining shares worth Rs 3,000 crore by DLF Cyber City.

“This strategic transaction would be a game-changer for the company as it would not only remove conflict of interest and reduce significantly the overall debt, but create free cash flows,” DLF’s senior executive director (finance) Saurabh Chawla had said earlier. While the residential business will be driven 100% by DLF, the commercial segment will be run in a JV with GIC. DLF promoters — K P Singh and family – will infuse the net proceeds from this transaction into DLF for debt repayment.

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 to maintain promoters shareholding at 75 per cent post their infusion of funds. DLF would use this Rs 13,500 crore to repay its debt that stood at nearly Rs 26,000 crore at the end of the June quarter. DCCDL has rent yielding assets of 26.9 million square feet with annual rental income of over Rs 2,500 crore. It is currently developing 2.5 million sq ft area and has land bank for further development potential of 19 million sq ft.

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