DLF Jumps as Market Access Ban on Founder Quashed

DLF Ltd., India’s largest developer by market value, advanced the most in two months after a tribunal quashed a ban on its billionaire founder from the securities markets.

Shares of the company, based in Gurgaon near New Delhi, climbed 5.3 percent to 157.40 rupees in Mumbai, the biggest gain since Jan. 23. They jumped almost 9 percent after the decision by the Special Appellate Tribunal.

The Securities and Exchange Board of India, the nation’s markets regulator, in an order posted on its website on Oct. 13, had barred DLF, Chairman Kushal Pal Singh and five other officials from “buying, selling or otherwise dealing in securities, directly or indirectly, in any manner” for three years as the company suppressed information when it sold shares for the first time in 2007.

Lifting the restriction will help the developer to raise funds from sales of commercial mortgage-backed securities, or CMBS, and real-estate investment trusts. DLF’s borrowings minus cash is almost 50 percent of the combined debt of India’s six biggest developers, data compiled by Bloomberg show.

Singh controls about 75 percent of DLF and has a net worth of $4.1 billion, according to the Bloomberg Billionaires Index.

The restraint imposed on DLF and others “is quashed and set aside,” as per the majority decision, SAT said today on its website. “Since the appellant has already suffered for the last more than five months for no fault, the prayer for stay of majority decision is, therefore, not allowed.”

‘Tactically Monetize’

The company is looking to “tactically monetize” almost 30 million square feet of commercial assets through REITs to increase cash flows and reduce debt, a Feb. 9 exchange filing showed. It had a net debt of 203 billion rupees ($3.23 billion) as of Dec. 31, according to the filing.

“This would allow DLF to look at REITs and CMBS on parallel lines with selling off non-core assets,” said Amit Harichand Anwani, a Mumbai-based real estate analyst at Kantilal Chhaganlal Securities Pvt. “Having this alternative will help them in managing their debt.”

DLF raised 91.9 billion rupees about eight years ago, in what was then India’s biggest initial share sale, by selling 175 million shares at 525 rupees apiece.

The IPO garnered orders for 3.5 times the shares on offer. The company failed to disclose financial information and pending litigations about some of its units at the time of the IPO, according to the SEBI order.

DLF has gained 15 percent this year, compared with a 3.7 percent gain in the benchmark S&P BSE Sensex.

(Corrects to say ban on founder from accessing market is quashed.)
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