DLF launches India's biggest IPO, fixes price band at Rs. 500-550

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During the issue that will remain open for public subscription from June 11 to June 14, DLF will offer 175 million equity shares of Rs. 2 each through 100 percent book-build route. The post-issue dilution would be over 10.27 percent. At Rs. 550 per share, its market cap would rise to Rs. 93,720 crore (approx. $23 billion), making it among the top ten listed firms in the country above India's top private bank ICICI Bank, valued at $20.6 billion; Wipro Ltd., $19.5 billion; and top lender State Bank of India, $17.1 billion.

According to DLF Vice Chairman Rajiv Singh, the company, which had cancelled a planned listing last year, expects strong earnings growth and steady real estate prices.

"We have priced it to the benefit of the investors ... It will be seen as an extremely reasonable offering," Reuters quoted him as saying.

New Delhi-based DLF, which has developed 220 million square feet of property, expects to spend Rs. 3500 crore (approx. $864 million) from the IPO to buy land, Singh said, adding that the rest would be used to meet construction cost and repayment of debt.

"Investors can expect a good pricing...DLF's IPO will create a benchmark for other realty companies and encourage them to enter the capital markets, thereby improving the transparency of the sector," said Prithvi Haldea of PrimeDatabase.

DLF's public issue would be the largest IPO. The ONGC issue, in which government had raised around Rs. 10,500 crore (approx. $2.6 billion) was an offer for sale. DLF, according to AC Nelson report, is the largest real estate development company in India in terms of residential, commercial and retail area developed. It has persence in all verticals of real estate including Special Economic Zones (SEZs). It has currently 46 million sq ft under development in various projects and a massive land bank of over 10,200 acre.

The company has formed a JV with global hospitality major Hilton for its hotel business. It has also tied up with UAE-based Nakheel to develop townships projects.

Kotak Mahindra Capital Co Ltd and DSP Merrill Lynch Ltd are the global co-ordinators and book running lead managers for the issue.

Citigroup Capital Markets India, ICICI Securities, Lehman Brothers Securities, UBS Securities and Deutsche Equities India are the lead managers. SBI Capital Market is the co-book running lead manager for the issue.

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