DLF owner Singh raises Rs 3,850cr
Sells 9.9% Stake In Realty Major To Compensate For Losses In DLF Assets New Delhi: K P Singh, promoter of the country’s largest real estate company DLF, sold 16.8 crore shares on Wednesday (at Rs 230 per share) to raise around Rs 3,850 crore. A part of the fund raised would be used to compensate the loss incurred by DLF Asset (DAL), another company promoted by Singh. Post-sale, the promoter’s holding in DLF will be down at 78.6%. DAL was created to buy assets from the market and lease them out to earn rentals. So far, it has bought assets mainly from DLF —in 2007 and 2008 —when property prices were at peak. After the global slowdown and real estate crash, DAL’s business of renting out premises is not generating enough revenues to pay back money to DLF. So, the promoter needs to infuse fresh money into DAL to meet its obligation towards DLF. DAL has to pay around Rs 5,000 crore to DLF against acquisition of assets. Singh, it is learnt, is considering to merge both the entities. But as the value of the assets acquired by DAL has depreciated in the last nine months, the merger will mean loss for him. A part of the money raised on Wednesday will be used to fund this loss before the merger takes place. DLF has appointed a committee of independent directors to review strategic relationship with DAL, said a statement. While declaring its annual results, the realty firm had said, “Due to the impact of global slowdown on commercial leasing, the board of directors of DLF deemed it fit to review the strategic relationship with DAL.’’ DLF had suspended sales to DAL in the last quarter and did not complete the originally proposed volume of delivery, the statement added. A part of the fund will also be used to pay back one of the investors in DAL, D E Shaw, which invested $400 million in 2007 and now wants to exit. The statement said, “Fund raised would be infused as capital in DAL to meet its contractual obligation towards DLF and its subsidiaries.’’ The Wednesday’s transaction took place at less than half the price of Rs 525 per share at which the company had sold its share in IPO (2006). On Wednesday, DLF’s share price fell 1.59% to Rs 232.50. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
