DLF Launches $2 Bn Issue

DLF, real estate major, floated India's largest IPO of over $2 billion on May 29 amid rising investor wariness over real estate stocks and regulatory fears of a bubble in this large, but loosely-organised sector. The Gurgaon, Haryana-based DLF will offer 175 million shares to investors at a price band of Rs 500-550 per share. The issue will open for subscription on June 11, one year after the company first made its plans public. At the lower end of the band, the issue will raise Rs 8,750 crore, while at the upper end it will garner Rs 9,625 crore. The issue is a landmark event for both DLF and the Indian capital markets. At the upper end of the band of Rs 550, DLF will command a valuation of Rs 93,800 crore, making it the eighth largest company by market value after Reliance Communications but before ICICI Bank. In the past two years, the stock markets have seen greater liquidity, stronger FII participation and greater investor confidence, enabling companies with strong financials to mobilize large amounts of money through IPOs. Reliance Petroleum mopped up Rs 8,100 crore in April last year, a record that DLF is hoping to beat. Real estate stocks have been extremely volatile in the recent months. For instance, Parsvnath Developers, which was listed in late 2006, was trading at Rs 450 plus levels at the beginning of 2007. It fell to a low of Rs 226.75 by early March - the recent weeks have seen it recover to Rs 320. Unitech, which is the largest listed real estate player right now, was close to Rs 500 at the beginning of the year, a level from which it dropped 35% by early March. The current market price is Rs 600 - coming on back of strong results and a bonus issue.