DLF Plans June Share Sale, May Be India's Biggest

DLF Universal, an Indian real- estate developer, said it plans a June share sale that may be the biggest by an Indian company, raising funds to complete existing projects and fund expansion.

The company expects to raise more than the 105 billion rupees ($2.3 billion) raised by the Indian government from the sale of a 10 percent stake in Oil & Natural Gas Corp. in March 2004, Chief Financial Officer Ramesh Sanka said today.

Indian real-estate companies such as DLF are expanding to gain from the surge in demand for homes, offices and retail space as the government allows overseas companies in more industries and faster economic growth boosts middle-class incomes in the nation of 1.1 billion people. India is forecasting sustained annual economic growth of 8 percent.

"We are bullish on the sector,'' Amandeep Chopra, who oversees about $221 million in stocks at UTI Asset Management Co. in Mumbai, said. ``We do have exposure currently and we will be also looking at exposure in newly listed companies or additional offerings from new companies.''

DLF hired DSP Merrill Lynch and Kotak Mahindra Bank to manage the share sale, Sanka said. UBS AG, JM Morgan Stanley, Enam Securities Pvt., ICICI Securities Ltd. and Citigroup Inc. were named as bookrunners.

Billionaire Singh

The company plans to sell 200 million shares in an initial public offering after selling 35 million shares to private investors, Sanka told a media briefing in New Delhi. The shareholding of K.P. Singh, the billionaire owner of DLF, and his family will fall to about 87 percent after the sale from 99.5 percent.

The IPO will be priced on the basis of bids placed by investors. DLF, which plans to rename itself DLF Ltd., will file a prospectus with the stock market regulator by the first week of May, Sanka said.

The proceeds of the share sale will be used to complete developments that are in progress, and to fund expansion plans, said Sanka. DLF has projects in 18 cities and plans to expand its presence to 35 cities in two years. It also plans to build hotels. The company and its associates had sales of 20 billion rupees in the year ended March 31. The group had a profit before tax of 7 billion rupees in the year.

India's real-estate market absorbs $11.5 billion in capital yearly and the figure may rise to $90 billion in 10 years, according to an estimate by Trinity Capital Plc, a fund formed to invest in Indian property.

"If India has to grow 8 percent, then real estate has to grow at 20 percent a year,'' Sanka said.

A boom in property developments may lead to oversupply, said UTI Asset Management's Chopra.

"One needs to be very cautious and valuations need to be looked at very carefully,'' he said.