DE Shaw may exit 60% in DLF Assets

US-based private equity investor D E Shaw is looking to sell only 60% of its investments in DLF Assets (DAL), the company floated by the promoters of DLF Ltd, according to sources familiar with the deal.

Shaw had invested $400 million as convertible preference shares into DAL in 2007 with assurances from the developer of a public listing in 2008.  However, with the worldwide real estate market collapsing in 2008, the investor negotiated with the cash-strapped DLF promoters to provide them an exit route.

Eventually in May, Kushal Pal Singh and his son Rajiv Singh, the promoters of DLF, along with their families and private firms, sold their 9.9% stake in DLF at Rs 238 a share, raising about $760 million to pay off DE Shaw and acquire a majority stake in DAL.

Since then, DLF’s stock price has jumped to highs of Rs 414.

Sources told DNA  that Shaw is now “rethinking” its plan to exit totally from DAL and would now sell only 60% of its investments, or $240 million.

A DLF official had earlier said that promoters would not let Shaw stay as they wanted to “get over with the issue”. But sources said Shaw’s India chief Anil Chawla and promoters have a very “healthy relationship” and would reach a mutually agreeable deal regarding the investment.

Even DLF is now evaluating options to list DAL as a real estate investment trust (REIT) at the Singapore exchanges over the next 12-18 months. Shaw had its put option on their investment in May, which it exercised.

If the listing materialises, Shaw might gain more if it delays its exit from the company by 18 months as realty analysts believe the market has recovered from lows.