DLF promoters to sell 40% stake in rental arm to GIC

Singapore sovereign fund GIC Pte. will hold exclusive talks with the promoters of DLF Ltd, India’s largest property developer, to purchase their 40% stake in a rental unit.

The stake sale in its rental unit is expected to raise about ₹12,000-13,000 crore and will significantly bring down DLF’S debt levels. The transaction, which DLF claims will be a gamechanger for the firm, involves DLF promoter firms selling their entire 40% stake in DLF Cyber City Developers Ltd to institutional investors.

DLF’S audit panel on Wednesday approved the entry into the next phase of the process to negotiate definitive transaction documents, DLF said. “Once the documentation is completed and the terms and conditions are decided upon, the transaction will have to procure regulatory approvals,” said Ashok Tyagi, group chief financial officer.

The documentation of the deal is expected to be completed over the next couple of months and the money is expected to come in by the September quarter.

Blackstone Group LP and GIC were shortlisted to buy the stake in DLF’S rental portfolio.

“Once the money comes in the hands of the promoters, a substantial amount of money will come back into the company,” Tyagi said.

DLF will continue to hold its 60% stake in DLF Cyber City.

With the promoters infusing the sale proceeds into DLF and a subsequent equity raising, will help ease concerns about the company’s debt.

In the December quarter DLF’S debt rose by ₹1,257 crore to ₹24,397 crore.

In February, the developer said it expects debt to shoot up owing to muted sales and collec tions that will persist for a few quarters and lead to a shortfall in operating cash flows.

In an analyst presentation, the company estimated the shortfal at ₹750-1,000 crore per quarter.

This is the second time that DLF and GIC will partner after DLF Home Developers Ltd, a unit of DLF, and GIC entered into a joint venture to invest in two upcoming projects in centra Delhi in September 2015. GIC invested about ₹1,990 crore and DLF was to develop the projects