Business IdeasDE Shaw may retain stake in DLF Assets
The promoters of DLF Ltd, the country’s largest real estate developer, have said hedge fund DE Shaw may retain a partial stake in DLF Assets Ltd (DAL) as the fund is seeing an improved opportunity in the commercial realty market.
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In 2007, DE Shaw had invested $400 million (around Rs 1,910 crore) in DAL. Rajiv Singh, vice-chairman and one of the promoters of DLF Ltd, said in an analyst call that the company would shortly convey the outcome of the ongoing talks between the promoters of DLF and DE Shaw, which was showing an interest in maintaining its stake in DAL. In May this year, Rajiv Singh and his wife Kavita had sold 9.9 per cent of their stake in DLF to raise Rs 3,800 crore, of which Rs 2,200-2,400 crore was to be used to buy out DE Shaw’s investment.
DLF to up planned area
On the increased demand in the residential segment, Singh said: “We might increase the size of the area planned for the residential and retail segment as demand is getting better every month.”
DLF had earlier announced the launch of 8 million sq ft (msf) of residential space in the metro cities of the country. To date, DLF has launched only one major residential project of 2 msf in Delhi and the company is planning to launch new projects at an increased price.
“We were testing the market as we did not want to commit a major portion of our developable area at prices that would put pressure on us in terms of margins,” Singh pointed out.
The company is also looking to restart some of its earlier suspended commercial projects (offices and malls) as the demand for non-IT space is seen to be growing.
DLF Ltd’s receivables from DAL now stand at Rs 2,600 crore, compared with Rs 4,906 crore as on March 31, 2009. The company received Rs 2,500 crore from DAL in the first quarter of FY10, exceeding the target of Rs 2,000 crore. DLF expects another Rs 500 crore from DAL during the fiscal. DLF is focusing on de-leveraging and the company’s net debt stands at Rs 11,686 crore, compared with an opening net debt of Rs 13,958 crore at Q1FY10.
The company has received Rs 500 crore through the sale of non-core assets and expects another Rs 5,000 crore during the current fiscal. The company’s debt-to-equity ratio stands at 0.5 per cent, down from 0.6 per cent as on March 31, 2009. DLF expects to bring it down further to 0.3 per cent by the end of FY10.