DLF Soon To Host A Shares Sale

The Securities and Exchange Board of India (SEBI) has said that all the listed entities (except Public institutions) need to have at least 25 per cent of the total shares with the public by June 2013. With this, DLF’s promoters who hold more than 75 per cent of the total shares are looking to bring down their stake. Many companies in the past have tapped the market earlier and now it is time for the real estate major DLF to do so.

Yesterday, the Board of Directors approved a fresh issue of around 8 crore equity shares which would reduce the promoters’ stake by 3.58% from 78.58% to 75%. If the issue is considered at the current market price of Rs 280 per share, then the company would get an additional fund of around Rs 2250 crore.

In the past six months, the Domestic Institutional Investors (DIIs) have been the net sellers while Foreign Institutional Investors (FIIs) have been the net buyers in the broader markets. However, it is completely opposite for DLF, the FIIs have reduced their stake from 16.21% in December 2011 to 15.85% in December 2012. While on the other hand, DIIs’ stake has increased from 0.28% to 0.98% in the last one year.

According to business standard reports, the funds raised would probably be used in paying off the company's debt. DLF has enormous debt in its books, as on December 2012. The company had a debt of around Rs 21,350 crore. The fund raised in the markets would reduce its debt by around 10% of the existing outstanding debt. DLF, in the past, has focused on its high debt and has taken various steps to reduce the same. It has sold a piece of land in Mumbai and has also sold its core assets since the last couple of quarters to bring down its overall debt.

As of now, things look optimistic for the real estate space as the interest rate is expected to soften in the coming days. Nevertheless, we would be updating our readers on the same when things pan out.