Overview:
DLF Universal Limited, originally registered as Delhi Leasing and Finance on 18th September, 1946, is a leading real estate developer in India. It was founded by Chaudhary Raghuvendra Singh. Now headed by Kushal Pal Singh, the company essentially focuses on residential, commercial and retail segments of the real estate industry.
Mr. K.P.Singh is the son-in-law of the founder Chaudhary Raghuvendra Singh. He and his family together own about 99.5% of DLF group shares estimated to be around $10 billion as reported by Forbes magazine in 2006. He got selected to the Indian Army by British Officers Services Selection Board, UK. Subsequently, he joined the Indian Military Academy at Dehradun. He was commissioned into The Deccan Horse, a renowned cavalry regiment of The Indian Army. In the year 1960, he joined American Universal Electric Company, a joint venture between Universal Electric Company of Owosso, Michigan and the Singh family. Subsequently, he promoted another company, Willard India Limited in collaboration with ESB inc., Philadelphia for manufacturing automatic and industrial batteries in India and became its Managing Director. In the year 1979, he joined DLF Universal Limited. American Universal Company merged with DLF Universal Limited and Mr. Singh became the Managing Director of this new company.
Between 1969 and 1974, the group built around 22 colonies in Delhi and neighbourhood areas. In 1975, they began developing the DLF city, spread over 3000 acres in Gurgaon, a suburb of Delhi. Today, DLF City, spans five phases and encompasses high end residential, commercial, corporate and institutional complexes besides community, recreational and health facilities for varying sections of society.
In 1982 the group ventured into housing projects. They followed it up with building community shopping centres in 1989, “A” grade office space in 1991 and organized retail complexes in 2002. The group expanded their primarily Delhi based business into nationwide in 2003, constructing IT parks, homes, retail outlets, SEZs (special economic zones) and hotels. In 2004, a 125 acre cyber city was commissioned in Gurgaon, Haryana. DLF Cyber City is one of India’s largest integrated technology parks, which provides some of the most advanced and integrated workplaces spread over 125 acres.
In 2005, the group launched a premium residential complex project in Mangolia. Last year, they expanded their business into 29 cities across India. They also launched Park palace, a premium residential complex across select cities.
Business plans:
Office space: 62 million square foot of office space are being planned. The IT parks are located at Chandigarh, Kolkata, Bangalore, Pune, Hyderabad, Chennai and Noida.
Homes: 220 million square foot has been developed as colonies and townships in the past, including 17 million square foot of residential properties. 9 million square foot of saleable area is under construction and nearly 70 million square foot of residential projects across country in next 3 years has been planned. In the longer term 375 million square feet of residential space is being planned.
Retail outlets: Three shopping malls have been built in DLF City, Gurgaon. Two more in Delhi, two more in Gurgaon and one in Chandigarh will follow soon. Five malls in Delhi, one each in Jalandhar, Noida and Gurgaon are under construction. One shopping mall is to be launched soon in Kolkata. Three in Mumbai, 2 in Hyderabad, one each in Delhi, Ludhiana, Bangalore, Pune, Chennai, Cochin and Amritsar are being planned.
SEZ’s: SEZs are a new business concept in India, and provide attractive fiscal incentives for both developers and tenants. Each multi product SEZ will be developed as an integrated township and will include residential accommodations, commercial and retail facilities, as well as schools, hospitals, hotels and other support infrastructure, including captive power generation facilities.
Hotels: Recently DLF entered into a joint venture with Hilton to develop and own a chain of hotels and serviced apartments in India. An alliance agreement and shareholder agreement was formed between Hilton and DLF in 2006. Under the terms of the Alliance Agreement, the joint venture company plans to acquire and develop 50 to 75 hotels and serviced apartments in India under certain Hilton brands. Hilton will manage all of the hotels developed under this joint venture. The joint venture will receive an equity investment of up to US$550 million over the next five to seven years, of which DLF will contribute approximately US$407 million or 74% of the total equity share capital. The remaining US$143 million or 26% of the total equity will be contributed by Hilton. The joint venture company is in the process of evaluating 22 sites for the construction of up to 5,000 rooms catering to the business, four star, five star and deluxe segments of the hotel and serviced apartments market.
Infrastructure: DLF plans to venture into infrastructure also. The key focus areas are construction of expressways, highways, airports and other key infrastructure projects. DLF Laing O’Rourke (a joint venture between DLF and UK based construction major Laing O’Rourke) will be formed to execute various captive projects of the group.
Leisure: DLF golf and country club has a 18 hole par 72 Arnold Palmer Signature Golf Course. The City Club is spread over four and a half acres of green ambience in DLF City. World class recreational facilities and amenities are available. Equipped with Squash courts, modern gymnasium, swimming pool with an adjoining cafe, tennis courts, basketball hoop, table tennis, yoga and aerobic classes, there are also conference rooms, well appointed spacious rooms, an exclusive multi cuisine restaurant, banquet hall, cyber library, modern bar and billiards and card rooms.
Details of the IPO:
Issue period: Between June 11, 2007 and June 14, 2007
Issue size: 175,000,000 (10.26% of the fully diluted post issue capital of the company)
Face Value: Rs.2
Method: 100% book building
Price band: Rs.500 to Rs.550 (250 to 275 times face value)
Market lot: 10 shares
Minimum order: 10 shares
Retail investor cap: Rs.100,000 maximum
Application forms can be downloaded from this link. The Red Herring Prospectus is available for download here.
Conclusion:
This is really an excellent IPO. It looks great from their business model and future prospects, especially considering the demand for more housing, infrastructure etc. How it will be received by the stock market will have to be found out when it gets listed. Please read my earlier article “How do IPO’s fare in secondary market?”