DLF founders raise $783 mn in share sale (Reported by Mint on their website)

The founders of DLF Ltd on Wednesday raised $783 million through a share sale in India’s top listed property firm. Two banking sources said the shares were sold to about 30 institutional investors.

DLF, which has been hit by high debt and declining profits amid a property market downturn, had been seeking funds after a planned Singapore listing of its property trust was shelved last year following a global equities slide.

The company said its founders would use the proceeds from the sale of 168 million shares to inject capital into property trust DLF Assets Ltd (DAL) and also to buy private equity D E Shaw’s stake in DAL.

The DLF holding of the founders, K P Singh and family, will drop to 78.6% from 88.5% following the deal, which was managed by Deutsche Bank and JPMorgan.

Analysts said the deal was a positive for the company and the sector as it showed that fund raising was possible, boosting DLF shares as much as 7.9% in a weak Mumbai market.

“DLF had been struggling to get private equity investment into DAL,” said R K Gupta, managing director at Taurus Asset management in New Delhi.

“If they are getting close to $1 billion from this, it will help them clear DAL’s dues to DLF and eventually they can merge DAL with DLF,” he said.

DLF joins other firms such as rival Unitech, wind turbine maker Suzlon Energy and software maker Tata Consultancy, whose founders recently raised funds through share sales.

Unitech raised $325 million through share sales, while the founders ofSuzlon got $47 million by selling 2% equity.

Exchange data showed 168.1 million shares changed hands at Rs237 each in a block deal for a total Rs39.8 billion ($808 million), but DLF later said in a statement its founders got 38.6 billion rupees from the transaction.

The deal was done at less than half the price DLF commanded when it raised $2.25 billion in its IPO in July 2007 offering 175 million shares at Rs525 each. DLF’s market value is now about $8 billion, down from a

January 2008 peak of $23 billion. At 1:37pm, shares in DLF were up 3.3% at Rs244.15 in a Mumbai market down 0.5%.

Propert trust

Privately-held DLF Assets Ltd buys commercial real estate from DLF at market price and then leases it out.

Media reports have said Symphony Capital was the other PE investor in DAL, along with D E Shaw and the company’s founders. DLF has not disclosed details of the holdings.

DLF said in April its board was “reviewing strategic relationship” with DAL and an independent committee of directors was evaluating the “most value accretive” transaction for DLF shareholders, which analysts and media reports have said could lead to DLF taking over DAL.