November 13, 2006

DLF Plans IPO in First Quarter of 2007 After Resolving Dispute

Indian billionaire Kushal Pal Singh's DLF Ltd. plans to revive its stalled initial public offering in the first quarter of next year after resolving a dispute with some shareholders, people involved in the sale said. DLF may raise between $2 billion and $2.5 billion, the three bankers said, asking not to be identified because details are confidential. The New Delhi real estate developer in August shelved a planned December IPO after regulatory documents lapsed. Regulatory delays, following a complaint by shareholders, and investor concerns about DLF's valuation hindered plans to complete this year what the company hoped would be India's biggest share sale, the bankers said. DLF is betting a rally in India's benchmark stock index to a record and a more optimistic outlook for projects will lure investors. ``I don't see a problem in terms of valuations,'' said Dipak Acharya, who helps manage the equivalent of $28 million at BOB Asset Management in Mumbai. Real estate and construction companies are doing well.'' DLF said New York-based Cushman & Wakefield, the world's third-largest commercial real estate broker by revenue, valued 228 million square feet of land owned by the company in 64 locations at as much as 1.07 trillion rupees ($23.9 billion). DLF is confident of attracting investors as it has more projects on hand than in May, when it filed the share-sale document, said Saurabh Chawla, DLF's senior vice president for finance. Liquidity ``There is no dearth of liquidity in the world market as of now, especially for India,'' Chawla said in an interview last week. Real estate is a ``must-own'' asset for most funds worldwide, he said. He declined to say how much the company is seeking to raise from the sale of shares. India's key Sensitive index has surged to a record, gaining 41 percent since the start of the year. Raising as much as $2.5 billion would value DLF and its subsidiaries at about $20 billion and investors would pay $450 million for every dollar of profit. DLF had net income of 1.99 billion rupees in the year ended March 31. ``The sector is interesting but maybe this company is not the one, it's not cheap,'' said Jon Thorn, who manages $250 million of assets at India Capital Fund Ltd. in Hong Kong. ``How do you value a property company in a market that doesn't have any large property companies to value it against? There are just too many questions.'' Sale Managers DLF hired Merrill Lynch & Co. and billionaire Uday Kotak's Kotak Mahindra Capital Co. to manage the share sale. UBS AG, Morgan Stanley, Enam Financial Consultants Ltd., ICICI Securities Ltd., Citigroup Inc. and SBI Capital Markets Ltd. will also help sell the shares. Investors would pay about $51 million for every dollar of profit in Parsvnath Developers Ltd., a real-estate developer based in New Delhi that plans to raise as much as 9.96 billion rupees selling shares this month. Parsvnath had net income of 1.07 billion rupees for the year ended March 31. Some minority investors said they missed the chance to buy convertible bonds as they didn't receive notice from DLF. The company, previously known as DLF Universal Ltd., will meet shareholders in an extraordinary general meeting tomorrow to allow the investors to subscribe to debentures offered in December last year, according to a notice on the company's Web site. The shareholders can convert the debentures into equity, which will entitle them to bonus shares. DLF plans to submit offer documents with regulators in December after getting the necessary approval, said Chawla, who is based in Delhi. Issues Resolved Some shareholders, including Kishor Ghiya, filed a complaint with the market regulator on June 6 that they weren't informed about the debenture offering last year, depriving them of an opportunity to own more stock when DLF converted the bonds into shares in March. ``Our issues have been resolved,'' Ghiya, who owns 3,287 shares in DLF, said in a phone interview from Rajkot in Gujarat. ``I don't see any reason for any problem with the share sale.'' According to a document filed with the regulator in May, DLF planned to sell 202 million shares, of which 187.1 million were new stock. It had planned an additional 17 million on demand, bringing the sale to a 12.77 percent stake. The company may change the number of shares it will offer after Nov. 14, the bankers said. DLF has yet to make a decision on the size of the offering, Chawla said. DLF's share sale may exceed the 105 billion rupees ($2.3 billion) raised by the Indian government from the sale of a 10 percent stake in Oil & Natural Gas Corp., the nation's biggest explorer, in March 2004, DLF's Chief Financial Officer Ramesh Sanka said on April 20. Singh, his family and holding companies it controls own 98.66 percent of DLF, according to the documents filed in May. //Source: www. ---------------------------------------------------