News: DLF plans IPO worth over $2 b
(BL 21/04/06) New Delhi - Top Indian real estate firm DLF Universal Ltd. is planning an initial public offer in June that should easily set an Indian market record, chief financial officer Ramesh Sanka said on Thursday.
The New Delhi-based company is selling 200 million new shares, or a 10 per cent stake, which it expects will raise well over $2 billion.
That would make DLF's issue comfortably larger than the IPOs of Tata Consultancy Services Ltd. and NTPC Ltd., India's largest software services exporter and electricity generator, which each raised $1.17 billion in 2004.
"This should be the largest ever IPO in India," Sanka told reporters at a news conference.
"We plan to file the prospectus by end of this month or first week of May. So that means we plan to hit the market in the month of June."
Sanka said DLF, which has begun the legal process of changing its name to DLF Ltd., would use the IPO money to finance current and future projects.
"The company has grown substantially and wants to (continue to) grow substantially. We need access to funds," he said. "And public equity has more advantages."
On top of the 200 million shares, the firm has set aside another 35 million shares for sale to a private equity investor.
The DLF public issue will dwarf the year's most keenly awaited IPO to date, from Reliance Petroleum Ltd., which is raising $620 million and closed on Thursday. A source said it had been oversubscribed by 45 times.
Companies are rushing to raise cash on a red-hot Indian stock market, which has gained 28 per cent this year, helped by net foreign fund inflows of $3.5 billion and a good economic outlook.
Sanka said growth in the Indian economy translated into a strong growth story in real estate, making even sky-high prices for Indian real estate look realistic.
"We believe it is at the correct level as it is driven by demand. We do not expect any correction in the short term," he said.
DSP Merrill Lynch and Kotak Mahindra Capital are global coordinators for the IPO, while the lead managers are UBS, JM Morgan Stanley, Enam Securities, ICICI Securities and Citigroup.
DLF had raised its authorised capital to Rs 500 crore from Rs 40 crore ahead of the offer. The group had unaudited sales of Rs 2,000 crore for the year to March 31, Sanka said, estimating profit before tax would be about Rs 700 crore.
India eased rules on foreign finance of construction in early 2005, and firms have been keen to raise money or rope in foreign partners to expand their business in a largely fragmented market.
DLF, or Delhi Land & Finance, was set up about 60 years ago by Chaudhary Raghvendra Singh and has developed townships, shopping malls, hotels, special economic zones and infrastructure projects. About 95 per cent of its revenue comes from real estate.
Sanka said DLF planned to extend its presence to 35 Indian cities in the next two years from 18 now and was already working with hotel chains to build business and budget hotels, though DLF would not manage them.
The company is perhaps best known for developing Gurgaon, near New Delhi, transforming it from a quiet, laid-back village to a bustling hub for industry, back offices and homes.
The personal fortune of DLF chairman Kushal Pal Singh, the son-in-law of Raghavendra, is estimated at $20 billion, according to local news reports.
The New Delhi-based company is selling 200 million new shares, or a 10 per cent stake, which it expects will raise well over $2 billion.
That would make DLF's issue comfortably larger than the IPOs of Tata Consultancy Services Ltd. and NTPC Ltd., India's largest software services exporter and electricity generator, which each raised $1.17 billion in 2004.
"This should be the largest ever IPO in India," Sanka told reporters at a news conference.
"We plan to file the prospectus by end of this month or first week of May. So that means we plan to hit the market in the month of June."
Sanka said DLF, which has begun the legal process of changing its name to DLF Ltd., would use the IPO money to finance current and future projects.
"The company has grown substantially and wants to (continue to) grow substantially. We need access to funds," he said. "And public equity has more advantages."
On top of the 200 million shares, the firm has set aside another 35 million shares for sale to a private equity investor.
The DLF public issue will dwarf the year's most keenly awaited IPO to date, from Reliance Petroleum Ltd., which is raising $620 million and closed on Thursday. A source said it had been oversubscribed by 45 times.
Companies are rushing to raise cash on a red-hot Indian stock market, which has gained 28 per cent this year, helped by net foreign fund inflows of $3.5 billion and a good economic outlook.
Sanka said growth in the Indian economy translated into a strong growth story in real estate, making even sky-high prices for Indian real estate look realistic.
"We believe it is at the correct level as it is driven by demand. We do not expect any correction in the short term," he said.
DSP Merrill Lynch and Kotak Mahindra Capital are global coordinators for the IPO, while the lead managers are UBS, JM Morgan Stanley, Enam Securities, ICICI Securities and Citigroup.
DLF had raised its authorised capital to Rs 500 crore from Rs 40 crore ahead of the offer. The group had unaudited sales of Rs 2,000 crore for the year to March 31, Sanka said, estimating profit before tax would be about Rs 700 crore.
India eased rules on foreign finance of construction in early 2005, and firms have been keen to raise money or rope in foreign partners to expand their business in a largely fragmented market.
DLF, or Delhi Land & Finance, was set up about 60 years ago by Chaudhary Raghvendra Singh and has developed townships, shopping malls, hotels, special economic zones and infrastructure projects. About 95 per cent of its revenue comes from real estate.
Sanka said DLF planned to extend its presence to 35 Indian cities in the next two years from 18 now and was already working with hotel chains to build business and budget hotels, though DLF would not manage them.
The company is perhaps best known for developing Gurgaon, near New Delhi, transforming it from a quiet, laid-back village to a bustling hub for industry, back offices and homes.
The personal fortune of DLF chairman Kushal Pal Singh, the son-in-law of Raghavendra, is estimated at $20 billion, according to local news reports.
posted by InCar Group Press Room at 12:41
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