Blackstone, GIC, others eye DLF promoters’ 40% stake in rental arm

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Blackstone, GIC, Canada Pension Plan and Qatar Investment Authority are among the 25 global investment firms that have shown interest in buying DLF promoters’ stake in its rental arm, a deal estimated at about $2 billion (Rs 13,532 crore).

DLF, the country’s largest realty firm, had in October last announced that its promoters will sell their 40% stake in the DLF Cyber City Developers Ltd (DCCDL).
DLF owns remaining 60% stake in DCCDL, which holds its bulk of office and retail complexes.
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The promoters will re-invest a significant part of the amount realised from the sale into DLF.

According to sources, global investment firm Blackstone, Singapore’s sovereign wealth fund GIC, Canada Pension Plan Investment Board (CPPIB), Singapore-based Mapletree, Qatar Investment Authority and Abu Dhabi Investment Authority are among the institutional investors that have evinced interest in taking part in the bidding process.
GIC recently invested nearly Rs 2,000 crore in DLF’s two upcoming projects in the national capital. In 2011, DLF had sold its stake in IT SEZ at Pune to Blackstone.

“More than 25 global institutional investors have evinced interest in this proposed transaction. We expect to sign term sheet by end of March or mid-April,” DLF’s Senior Executive Director Finance Saurav Chawla had said last week. DLF is targeting to complete this deal by July.
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Market sources had earlier said that the deal size could be about Rs 12,000-14,000 crore.

“With this proposed transaction, DLF will be able to achieve three of its main objectives — removal of conflict of interest, creation of a rental platform with large financial investors and reducing substantial portion of debt,” Chawla had said in October.

DLF has a net debt of about Rs 21,400 crore at present.

DCCDL’s debt is expected to be around Rs 12,000 crore by end of March. The annual rental income of DCCDL is about Rs 2,250 crore, while total expected rental income of the entire group is Rs 2,700 crore in this fiscal.

DLF’s strategy is to grow its commercial business, organically and inorganically, in partnership with institutional investors which have a long investment horizon.

The company has a land bank of 281 million sq ft, of which 37 million sq ft is under construction.

Last week, DLF reported 24% rise in consolidated net profit at Rs 163.95 crore for the quarter ended December against Rs 131.79 crore in the year-ago period. Total revenue went up by 43% to Rs 2,981 crore in the quarter ended December from Rs 2,080 crore a year-ago.