DLF to close two pvt equity deals to raise Rs1,000cr
India’s largest realty firm DLF is looking at closing two private equity deals worth around Rs 1,000 crore by September to part-finance its upcoming housing projects in Chennai and Gurgaon. DLF had announced plans in February to raise over Rs 3,000 crore through divestment of stakes in certain housing projects to private equity (PE) players.
Sources said some PE players are evaluating DLF’s housing projects in Chennai and new Gurgaon. It is targeting at least two deals in the first half of this fiscal worth about Rs 1,000 crore. When contacted, DLF spokesperson said the company does not comment on market speculations. In view of sluggish housing sales in last few years, DLF has decided to raise private equity funds at project levels to boost cash flows. “Since sales are slow, we are planning to raise about Rs 3,000 crore through private equity. In the short term, PE fund will be the substitute for the cash flow which would have normally come from sales,” DLF CFO Ashok Tyagi had said in February. DLF’s sales bookings fell by over 5 per cent to Rs 3,850 crore in 2014-15 against Rs 4,070 crore in the previous year. Even for the 2015-16 fiscal, DLF has recently given a sales bookings guidance of Rs 3,500-4,000 crore as the company feels that it would “take at least 12 months for the sales momentum to begin improving”. Apart from augmenting cash flow, DLF has decided to adopt this PE route to keep borrowing for its development arm (DevCo)at the current level. As on March 31, 2015, the company had a net debt of Rs 20,965 crore, of which about Rs 14,000 crore pertained to rental business and the rest was towards DevCo.
DLF has posted 22 per cent fall in consolidated net profit at Rs 171.62 crore in the fourth quarter of 2014-15 fiscal, as against Rs 219.68 crore in the year-ago period. Its income from operations fell to Rs 1,953.69 crore in January-March from Rs 1,969.45 crore in the year-ago period. During the full 2014-15, net profit dipped by 16 per cent to Rs 540.24 crore from Rs 646.21 crore in previous year. The company’s income from operations fell by 8 per cent to Rs 7,648.73 crore in the last fiscal from Rs 8,298.04 crore in 2013-14.