varun

The much-awaited initial public offer of real estate giant DLF opens on Monday to mop up Rs 9,625 crore in India's biggest share sale issue, but analysts are divided on whether the stock is overvalued.

Billionaire KP Singh-promoted DLF which is offering 17.5 crore equity shares through 100 per cent book building process, has fixed the price band at Rs 500-550 per share. The mega-issue would make it among the 10 largest firms on the bourses with a value of Rs 93,700 crore on the upper band. The proceeds from the issue will be invested in acquisition of land, funding existing projects and prepayment of the loans of DLF.

John

The much hyped DLF public offer was subscribed about 80% of its size at the end of the first day, with the institutional part of the IPO subscribed 1.5 times.

Data available on the NSE website showed that compared to 17.5 crore shares on offer, there was demand for about 13.6 crore shares at the close of Monday’s bidding. At the Rs 500-550 per share price band, the company could mop up about Rs 9,600 crore.

Market sources said the thinking on the part of the company and merchant bankers was to price the issue at about Rs 525-535 per share and not at the upper end of the band, at Rs 550. Market-men feel that by pricing the IPO slightly lower than the upper end, the company would leave some scope for appreciation on listing.

hema

Property developer DLF Ltd. got full subscription for its $2.4 billion initial public offering, the country's biggest, a day after it opened as big investors set aside fears of a property bubble.

The sale drew bids for 182.7 million shares by noon on Tuesday against an offer of 175 million shares, data posted on the National Stock Exchange's Web site nseindia.com showed.

"The bids have been across the 500-550 rupees (indicated) range," a banker to the issue said. "Most of the bids are from funds."

As much as 104.4 million shares, or nearly 60 percent of the offering, are for institutional investors. The remaining portion is for wealthy and retail investors.

Most retail applications are expected towards the close of the offer on Thursday, bankers said, but if there was a shortfall the shares would be allotted to institutional bidders.

Capital inflows for the IPO pushed the rupee up on Tuesday, traders said. At 1:20 p.m., the rupee was at 40.70/71 per dollar, strengthening from Monday's 40.79/80.

DLF, which built much of the outsourcing hub of Gurgaon near Delhi, is selling 10.27 percent of its enlarged capital to raise funds to build office space, shopping malls and residential complexes.

India's fast-growing economy has boosted demand for townships, but a rise in interest rates have cooled sales and lowered property prices that had shot up.

Some analysts say DLF's indicated price band was expensive, compared with its peers in Asia, but others argue the outlook for real estate developers in India was bright over the longer term as the robust economy boosts incomes.

If the sale is priced at the upper end of the indicative range, DLF would have a market value of around $23 billion, ahead of top lenders State Bank of India and ICICI Bank and rival Unitech Ltd., which is worth about $11 billion.

DLF had initially hoped to raise more than $3 billion in the IPO, but the offering was called off in May last year after the stock market dropped sharply and as it battled disputes with minority shareholders.

The IPO is lead managed by Kotak Mahindra and DSP Merrill Lynch. Other managers are UBS, Citigroup, Lehman Brothers, Deutsche Bank, ICICI Securities, and SBI Capital Markets.

- Reuters

Rex

DLF Limited, a prominent name in Indian real estate has been making the headlines because of its mega initial public offer (IPO), which got fully subscribed on second day of its issue. However, small retail investors will also have nice prospects to dig.

Believed to be the country’s largest public issue, DLF’s Rs 9625 crore IPO closes on June 14. The retail part of the issue is still to be subscribed fully. Bringing a time to rejoice for small investors, the IPO has reserved over 30 per cent of the shares for retail investors.

These investors are just required to pay a part of the money for the shares i.e. Rs 150 per share and make the remaining payment after allotment. However, they will neither be able to cash out a premium on the day of allotment nor exit the scrip, as they are not paying in full.

The retail investor will have to pay the entire amount upfront and invest in stock to take the exit route, explains Ganesh Shanbhag, CEO of SMS Financial Services Ltd. This clearly underlines the risk factor associated with the property prices. Also, many feel that the issue has been overpriced.

Since the retail investors have not shown large interest in DLF’s IPO in the first two days, the merchant bankers expect the small investors to apply on the last day. The company is confident about getting a substantial allotment considering the size of the issue.

varun

Shares of India's top real estate company, DLF Ltd., made a strong debut Thursday, rising nearly 9 percent in the country's biggest-ever initial public offering.

Last month, DLF raised about $2.25 billion by selling 175 million new shares to the public. Trading in the shares began Thursday on the Bombay Stock Exchange at a 11 percent premium to the issue price. Later, the stock fell slightly to close at 570.75 rupees ($14.11), or 8.8 percent above the issue price. The stock was also traded on the broader National Stock Exchange. DLF's listing has boosted the net worth of its Chairman K.P. Singh and immediate family members, who together own 87.4 percent of the company, to nearly $20 billion, making them one of the world's richest families.

DLF's market capitalization, which totaled $24.3 billion at Thursday's closing price, has propelled it into the league of top companies on the Indian bourses. "We are very grateful to the investors for trusting us," said Rajiv Singh, the company's vice chairman. The IPO came at a time when the government has been asking banks to slow real estate lending, because property prices have risen too fast over the past two years, stoking fears that the economy might be overheating.

"The listing has been better than expected," said Deven Choksey at Mumbai-based brokerage K. R. Choksey Shares & Securities. "Institutional interest is still alive." In Thursday's trading, DLF's stock was mostly bought by institutional investors, who remain upbeat about the long-term prospects of India's real estate sector. It didn't get a strong response from individual investors looking to make profit in the short term, analysts said. Short-term investors have been wary of real estate stocks as demand for residential houses has slackened in recent months because of high prices and a series of interest rate hikes.

Also, many found the stock's valuation high compared with rival companies. At the issue price of 525 rupees, DLF's shares were valued nearly 29 times its earnings in the year ended March, compared to 24 times for Unitech Ltd., which has land reserves comparable to DLF. India's economy, which is growing at close to 9 percent annually, has seen property prices soar in recent years, bringing windfall gains to companies like DLF that hold large land reserves on the outskirts of major Indian cities. Those were bought from farmers at rates much lower than the current market price.

DLF is the country's largest real estate firm in terms of the area it has developed. It plans to spend nearly $1.7 billion from the IPO proceeds on acquisition of more land and construction of ongoing projects.

Prior to DLF's stock offering, India's biggest IPO came from Britain's Cairn Energy, which listed its Indian subsidiary on the local stock exchanges last December, raising $1.4 billion.

Source: chron.com
Date: 09/07/07

Rex

I have a snippet to add to the given information regarding DLF...

India’s top real estate company, DLF Ltd. has come out with flying colors on the exchanges which is indicative of growing importance of the country’s real estate market.

The property market in India is believed to grow from a $12 billion to $50 billion by 2010. And, with the successful completion of DLF equity shares, the sector has certainly made a quantum jump.

DLF mopped up $2 billion plus (Rs 918.75 crore) and post listing its market capitalization is nudging Rs 100,000 crore. With this, the company has fetched a total market capitalization of around Rs 1, 70,000 crore. This constitutes for 4% of the country’s total capitalization, but the real estate will play big role in both domestic and international market.

At present, the penetration in both the commercial and residential segments remains low. Data showcased by the Planning Commission places the shortage near to 22 million accommodation units. The demand for residential units is primarily driven by a younger population with higher disposable incomes.

Indian real estate has great potential for growth which is bringing great money, says Abheek Barua, chief economist, HDFC Bank. The market is sure to attract attention of Private Equity (PE) players and prospective cross-border investors through the route of Foreign Direct Investments (FDI).

Also, corporatisation of the space will help Indian builders to woo funds. An increase in number of companies being represented on the bourses will bring greater transparency, accountability, and corporate governance.

Around $15-$18 billion is likely to have been invested in projects, with the government relaxing the FDI norms in March 2005. Many prominent foreign investors such as Blackstone, Morgan Stanley, and Emaar have parked heavy funds, says Sanjay Dutt, deputy managing director, Cushman & Wakefield.

Our property market actually needs to develop to encourage an active participation from players like pension funds, endowment funds and insurance companies, adds Dutt.