DLF , Bharti Airtel

After a couple of aborted attempts and a few hiccups later, real estate giant DLF finally made its much-awaited entry into the stock market. However, the recent slowdown in the industry and reports of property prices cooling off in some parts of India ensured that the listing was not as spectacular as some of the previous realty offerings. The company's pricing, which was considered as fairly valued, also had a bearing on the stock's performance as there was nothing much left on the table for investors, some of whom look for big listing gains and make a quick exit. They were certainly a disappointed lot. Still, it was a historic development, both for the real estate sector itself and for the Indian capital market. Post listing DLF became the eighth most valuable stock while the company's promoter - KP Singh - edged ahead of Azim Premji and Sunil Mittal to become the third richest person in India behind the two Ambani brothers.

Shares of DLF slipped after rising as much as 36% in the New Delhi-based real estate major's stock market debut. Investors turned cautious given the slowdown in the property market in the wake of the string of monetary tightening steps taken by the central bank and other measures announced by the Government to curb activity in the real estate sector. The stock opened at Rs582 on the Bombay Stock Exchange (BSE) as against the issue price of Rs525, reflecting a premium of nearly 11%. There was a freak trade at Rs714, but after that the euphoria dived, and subsequent trades took place at under Rs580.

The scrip finished the maiden trading day at Rs570, after touching a high of Rs714.25 and a low of Rs505.60. Total turnover in the stock, including F&O, almost touched Rs90bn. Also, delivery volume on the first day stood at 40% of the total traded quantity. The stock now accounts for half of the market cap of the real estate sector given the size of the issue. The realty sector itself has seen a huge jump in its total valuation with the DLF listing. The industry now ranks ahead of Auto, Pharma, FMCG and Cement.

DLF's 1.75-million share issue was subscribed 3.4 times. The price band for the issue was fixed at Rs500 to Rs550 per share. The issue price was set at Rs525, raising US$2.25bn in India's biggest IPO. The QIB portion of the issue was subscribed 5.1 times but the company barely managed full subscription for the 52.2 million shares reserved for retail investors. DLF, which scrapped the IPO in 2006 August because of shareholder disputes and valuation concerns, will use the proceeds to build apartments and offices and increase land purchases. But, the company is not done with its fund raising plans. DLF Assets, a fund set up by DLF, plans to raise US$1bn to buy land for development. It also plans to go public in the next 2-3 years.

Bharti Airtel Ltd. said it had offered a 4.99% stake to Temasek Holdings, Singapore Government's investment arm, for an undisclosed consideration. One of the group companies decided to grant an option to acquire an indirect stake in the company to a wholly owned subsidiary of Temasek Holdings, Bharti Airtel said in a statement. The option arrangement envisages acquisition of such number of shares which, on exercise, will result in a beneficial stake in the company to the extent of 4.99%, the New Delhi-based wireless telecom operator said. Though Bharti Airtel did not disclose the deal size, at current market price, it is worth over Rs82bn (about US$2bn).

Meanwhile, Singapore Telecommunications said it had the first right to buy shares of Bharti Airtel from Temasek. "The relevant parties have reached agreement that SingTel and Bharti have first rights to the shares acquired by Temasek pursuant to the exercise of the option, subject to certain conditions," SingTel said. "Should Temasek decide to exercise its option to purchase the shares from Bharti, and should Temasek decide to sell these shares thereafter, Bharti and SingTel have first rights," it clarified. SingTel currently has a 30.5% stake in Bharti Airtel. Temasek is the largest shareholder in SingTel.

This would be Temasek's second investment in a telecom company in India after it bought 9.9% in Tata Teleservices. There would not be a dilution in the promoters' stake in Bharti Airtel. Bharti Enterprises will continue to maintain a controlling stake of over 45% through its subsidiary Bharti Telecom, as Temasek is indirectly picking up shares from British telecom major Vodafone. After acquiring a majority stake in Hutch-Essar, Vodafone had announced that it would sell a 5.6% equity stake in Bharti Airtel for US$1.6bn in two tranches before November 2008. Vodafone will continue to hold its 4.39% indirect stake in Bharti Airtel.