DLF seeks to leverage subsidiaries to raise up to Rs7,500 crore

Bengaluru: DLF Ltd, India’s most valuable real estate firm, said it will seek board approval to create charge, lien or pledge of more than 50% of the company’s shareholding in three of its units to lenders to raise as much as Rs.7,500 crore.

DLF’s annual general meeting (AGM) is scheduled on 28 August.

Through its three units—DLF Cyber City Developers Ltd, Caraf Builders and Constructions Private Ltd and DLF Assets Pvt. Ltd—the realty firm runs its annuity or leasing business of office space, IT park, IT special economic zone and retail mall properties.

DLF holds 100% in all these subsidiaries that have over time, grown into a strong pipeline of leased assets with positive annuity income.

To augment long-term resources and to raise the necessary finance through loans, lease rental discounting, commercial mortgage backed securities, bonds and any other instruments of similar nature for the business operations, it may be required to create charge or pledge more than 50% shareholding, in one or more tranches, the Delhi-based developer informed the NSE.

As of 31 March, DLF’s net debt stood at Rs.20,695 crore. Of this, DevCo or DLF’s residential development arm’s debt is Rs.6,965 crore and RentCo, the rental portfolio has a debt of Rs.14,000 crore.

“If DLF manages to raise up to Rs.7,500 crore against its rental portfolio, and promoters go ahead and dilute their 40% stake in DLF Cyber City Developers, then that money will be put into DLF Ltd. From what we understand from discussions with DLF, the company plans to use most of that capital to make its development portfolio debt free,” said an analyst in a Mumbai-based brokerage, who didn’t want to be named.

Once it sells stake in the rental assets, DLF can opt for a REIT listing with its investor partner, through which the latter gets an exit, the analyst said.

DLF Ltd