The JV with Singapore's GIC is part of larger DLF plan to sell partial stakes in various projects to improve cash flow and lower debt
Plus, the realty major said its shareholders had approved a proposal to pledge more than 50% of its shares in three of its units to raise as much as Rs 7,500 crore. What brought the loudest cheer, however, is the fact that DLF has inked a deal with Singapore’s sovereign wealth fund GIC to sell a stake in two upcoming projects located in Central Delhi. Here, we must add that the projects are close to the under-construction DLF Capital Greens in Moti Nagar and part of the same 38 acre land that DLF bought in 2007 from DCM Shriram and Lohia Group.
Though Capital Greens, being built by L&T and designed by Mumbaikar Hafeez Contractor is horribly behind schedule, DLF plans to launch another 3,000 apartments spread across 20-25 acre here. The regulatory approvals for these new projects are already in place and they have a combined development potential of about 5 million sqft. DLF said, “GIC will invest a sum of approximately Rs 1,990 crore. The joint venture is expected to benefit from GIC’s experience of investing in integrated developments across the globe.” In a BSE filing, the company said, “DLF Home Developers Ltd (DHDL), a wholly-owned subsidiary of DLF Ltd, and GIC, Singapore’s sovereign wealth fund, have entered into a joint venture to invest in two upcoming projects located in Central Delhi. Both projects will be developed under DHDL.” Loh Wai Keong, managing director and co-head Asia, GIC Real Estate, said, “GIC is confident in India's long-term growth potential and we look forward to partnering DLF to tap the attractive opportunities of India's real estate sector. We hope to leverage our mutual strengths to grow this partnership with DLF and to collaborate on more projects in the future. Globally, we have nurtured long-term partnerships with strong and well-established developers across our key markets, and we hope to do the same with DLF in India." The deal will be completed once all the statutory requirements are met. The projects will be launched in the next 12 months and developed over five years. It is also learnt that DLF is working on drawing up a similar deal in a bid to cut down on its debt by over 50 percent. Company sources say the Gurgaon-based firm is looking to offload upto 50 percent of its stake in a holding company, which houses all the rent yielding assets, and will be based on a 10-year long term platform structure. With residential sales in the country being sluggish, DLF was prompted to raise private equity funds at project levels, in order to boost cash flows. The PE funds are meant to substitute for the cash flow that would have otherwise come from sales and are a short-term solution. This is not just with DLF, but a general trend across all realty majors, reflective of market sentiments and no increase in demand while supply of housing has increased. The deal with GIC is in line with the firm’s plans to unlock value in the development business, which is witnessing sluggish demand, by bringing in PE investors. “The GIC deal shows that we can also bring in investor partners for our rental portfolio in the future. If we dilute even 40-50% stake in our rental assets, it will help bring down the debt of our development portfolio by about 60-70%,” said Saurabh Chawla, senior executive director, finance, at DLF. Mr Chawla said that of the Rs 3,000 crore that DLF had planned to raise from PE funds, a substantial amount has already been raised. DLF plans to raise funds through joint ventures in certain projects as part of a strategy to improve cash flow and reduce its debt burden.
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