DLF Ltd., India's biggest realty company by sales, will exit a mutual fund joint venture in the country with Prudential Financial Inc. because of a proposed regulatory change, a person with direct knowledge of the matter said Monday.
"The move is prompted by a proposed regulatory change, which makes it mandatory for a company to have five years of experience before selling mutual funds," the person, who didn't wish to be named, told Dow Jones Newswires. The move is also in line with the New Delhi-based company's strategy to focus on real estate development, the person added. DLF currently owns 39% in the joint venture--DLF Pramerica Asset Managers Pvt. Ltd.--while Prudential owns the remaining 61%. "DLF will sell its 39% stake to Prudential," the person said, without disclosing details of the likely valuation of DLF's stake in the venture. Spokespeople from Prudential weren't immediately available for comment. The person said also that the time frame for DLF's exit from the joint venture is yet to be decided. In November 2008, DLF and Prudential had received an approval from the markets regulator, the Securities & Exchange Board of India, to jointly sell mutual funds and said they will jointly invest $45 million in DLF Pramerica. DLF Pramerica was planning to start selling mutual funds in 2009. Earlier Monday, The Economic Times newspaper reported that DLF plans to exit the venture to reduce its debt of nearly 120 billion rupees ($2.6 billion). DLF has been exiting its non-core businesses as part of its strategy to focus more on property development. The company's founders recently sold its multiplex-chain, DT Cinemas, to Indian multiplex operator PVR Ltd. The real estate developer also previously announced plans to sell its wind power business. Still, DLF has a separate life insurance venture with Prudential, DLF Pramerica Life Insurance Co. Ltd., in which the Indian realty firm owns a majority 74% stake, while the remaining stake is held by the U.S.-based insurance company. "The life insurance business is continuing and is doing very well for DLF," the person said. The life insurance business began operations in September 2008 with an equity base of 1.1 billion rupees. In November 2008, DLF had said that the companies will jointly infuse 10 billion rupees of capital over next five to six years in the life insurance venture. Source: http://online.wsj.com/article/SB10001424052748703569004575010112446094370.html--
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