DLF, Hubtown unload Pune SEZ to Blackstone

Debt-ridden DLF, the biggest real estate developer in the country, on Wednesday announced sale of its information technology special economic zone (IT SEZ) in Pune to Blackstone Group.

DLF owns a 67% stake in DLF Ackruti Info Parks Pune, the joint venture company for the IT SEZ. Hubtown Ltd (Erstwhile Ackruti City) owns the rest.

Blackstone is acquiring 100% stake in the company, paying DLF around `540 crore for its stake and Hubtown a little over `260 crore.

The partners will receive an aggregate `810 crore from “an entity controlled by a realty fund affiliated with Blackstone Group, BRE/Mauritius Investments II,” DLF informed the exchanges.
DLF plans to use the entire cash flow to retire debt. “The entire value received from the sale will go for debt reduction. Till 2013, we are planning to cut debt worth `6,000 crore. We are looking at monetising our non-core assets for the same. Aman Resorts is on the block for the next quarter,” said Rajeev Talwar, executive director, DLF Ltd.

Officials from Hubtown could not be reached for comment.
DLF’s total debt is at over `22,000 crore, which, according to company officials, would be repaid through a mix of cash flows and sale of non-core assets.

Among the other assets the company has put on the block is Noida IT Park.

Speculation is rife about the company’s only land parcel in Mumbai being on the block too, though company officials maintain it will not be sold.

DLF has already received the first tranche of payment from IDFC for its Noida IT park project this month. It holds 71% in Galaxy Mercantile, the joint venture formed for the project, which IDFC is in the process of acquiring.    

Early this month, DLF bought out an additional 26% from joint venture partner Hilton International in DLF Hotels and Hospitality Ltd for an estimated `120 crore, raising its holding to 100%. Company officials had earlier hinted that the stake buy was to consolidate and then sell the entire asset to another player.
Analysts, however, do not seem impressed by the asset sales.

“The company’s cash-flows have been negative this quarter. In addition, there is a cash outflow towards its stake buyback in the Hilton joint venture. I expect no major effect on the debt side —- no further upside in terms of further debt-based fundraising and even a marginal decrease of close to `100-200 crore worth of debt retirement,” an analyst from a foreign research firm said on the condition of anonymity.