DLF announces India's biggest IPO

Chandigarh, June 5 (UNI) Realty major DLF Ltd today announced the opening of country's biggest initial public offer to mop up as much as Rs 9,625 crore at a price band of Rs 500 - 550 per equity share.

The issue will comprise 17,50,00,000 equity shares of two rupees each through a 100 per cent book building process. The floor price of the band is 250 times the face value and the cap price is 275 times the face value.

The issue, to open between June 11 and June 14, will constitute 10.26 per cent of the fully diluted post-issue capital of the company.

Out of this total issue, one lakh equity shares of two rupees each will be reserved for subscription by employees, leaving a net issue of 17,40,00,000 equity shares.

''Real estate is the sunrise industry and the urban area is growing at a rate of 25-30 per cent. Corrections can take place but the talk about an asset bubble is fictional,'' DLF Executive Director Yogesh Verma said while addressing a media conference here.

The IPO's top band is at Rs 9,525 crore while the lower band stands at Rs 8,750 crore.

Out of the net proceeds from the IPO, DLF plans to spend Rs 3,500 crore on land acquisition and Rs 3,493.4 crore for developement and construction of existing projects and the remaining amount for prepayment of loans.

At least 60 per cent of the net issue will be allotted on a proportionate basis to Qualified Institutional Buyers (QIBs) while not less the 30 per cent of it will be available for allocation on a proportionate basis to retail individual bidders.

In the payment methods, in what can be seen becoming a norm with atractive IPOs, retail individual bidders will be eligible to pay Rs 150 on application, of which one rupee will be credited to face value and Rs 149 towards premium.

''We want to give an opportunity to everyone to invest in our company and therefore has made our pricing affordable to everyone and at the same time prosper by investing in the company,'' Mr Verma said.

Under the second payment method, applicable to any category, the payment of full application money will have to be made by the applicant. QIB bidders will be required to make a payment of 10 per cent of the bid amount, with the balance payable on allocation, but before allotment.

''Everyone involved with us makes money, so we are going into the capital market with this facet in mind,'' he said.

Kotak Mahindra Capital Company Ltd and DSP Merrill Lynch Ltd are the global coordinators amd BRLMs for the issue. Lehman Brothers Securities Pvt Ltd is the senior BRLM. Karvy Computershare Pvt Ltd, is the registrar to the issue.

The company has not opted for grading of the issue as is stipulated by the recently announced SEBI norms making it mandatory for IPOs after May 1, 2007 to be graded.

''Our IPO got SEBI clearing last year so the May 1 grading norm does not apply to us,'' he said.

The delay in coming out with our IPO has not effect the company in any way and the Rs 500 - 550 price band is sufficient, he said.

''The company feels it does not need a larger cash flow and dilute the company beyond 10 per cent, he added. Presently, the family holding in the company is 97.43 per cent while after the issue the holdings would stand at 87.4 per cent.

UNI