DLF Ltd. said Wednesday some of its founders have sold about 9.9% of the company's shares for about INR38.60 billion ($781 million) in the open market.
The founders sold about 168 million shares at just above INR230 apiece, India's biggest realty company by sales said in a statement. The transaction was at a 2.6% discount to the closing price of DLF shares Tuesday, it said.
DLF didn't identify the founders who sold the shares. Its founders comprise billionaire K. P. Singh, his family and several investment companies.
The transaction will reduce the founders' stake to 78.6% and nearly double the company's floating shares to 21.3% from 11.4%, it said. Deutsche Bank and J.P. Morgan were the advisers for the deal.
The statement didn't disclose the names of the buyers, but Rajiv Singh, DLF's vice chairman, told CNBC TV18 television channel that Capital International Fund and HSBC Holdings PLC. were among the investors.
“The transaction saw a strong response with significant demand from most of the large existing institutional shareholders as well as several high-quality new accounts using this opportunity to become core shareholders in DLF,” the New Delhi-based company said in the statement.
The founders sold the shares to raise money for property fund DLF Assets Ltd.
DLF Assets, entirely controlled by the founders, will use the funds to meet its payment obligations toward DLF and also buy out U.S. hedge fund – D. E. Shaw & Co.
D. E. Shaw had invested $400 million in DLF Assets, which buys commercial property from DLF.
A slowing economy has crimped demand for offices and software industrial parks in India, forcing DLF Assets to scout various fundraising options to repay DLF.
DLF stopped selling higher-margin commercial property to DLF Assets during the January-March quarter as its revenue fell to INR3.22 billion from INR18.45 billion in the year-earlier period.
“This transaction will put investor concerns regarding DLF Assets's liquidity to rest, as well as reduce the net exposure to DLF Assets in DLF's books,” the company said.
Shares of DLF gained as much as 7.9% on news of the stake sale. They traded 2.86% up at INR243.05 as of 0816 GMT on the Bombay Stock Exchange, compared with the benchmark index's 0.5% fall.
DLF's shares have declined 17% since January, widely underperforming a 25% rise in the main index.
Source: WSJ