New Delhi: Shares of country’s largest real estate company, DLF Ltd., made a strong debut on Thursday, rising nearly 9 percent in India's biggest-ever initial public offering.
Last month, DLF raised about $2.25 billion by selling 175 million new shares to the public for Rs 525 each.
Trading in the shares began on Thursday on the Bombay Stock Exchange at a 11 percent premium to the issue price. Later, the stock fell slightly to close at 570.75 rupees, or 8.8 percent above the issue price.
The stock was also traded on the National Stock Exchange.
DLF's listing has boosted the net worth of its chairperson K P Singh and immediate family members, who together own 87.4 percent of the company, to nearly $20 billion, making them one of the world's richest families.
DLF's market capitalisation, which totaled $24.3 billion at Thursday's closing price, has propelled it into the league of top companies on the Indian bourses. ''We are very grateful to the investors for trusting us,'' said Rajiv Singh, the company's vice chairman.
The IPO came at a time when the government has been asking banks to slow real estate lending, because property prices have risen too much too fast over the past two years, stoking fears that the economy might be overheating.
''The listing has been better than expected,'' said Deven Choksey at Mumbai-based brokerage K. R. Choksey Shares & Securities. ''Institutional interest is still alive.''
In Thursday's trading, DLF's stock was mostly bought by institutional investors, who remain upbeat about the long-term prospects of India's real estate sector.
It didn't get a strong response from individual investors looking to make profit in the short term, analysts said.
Short-term investors have been wary of real estate stocks as demand for residential houses has slackened in recent months because of high prices and a series of interest rate hikes.
India's booming economy, which is growing at close to 9 percent annually, has seen property prices soar in recent years, bringing windfall gains to companies like DLF that hold large land reserves on the outskirts of major Indian cities. Those were bought from farmers at rates much lower than the current market price.
DLF is the country's largest real estate firm in terms of the area it has developed. It plans to spend nearly $1.7 billion from the IPO proceeds on acquisition of more land and construction of ongoing projects. The rest would be used to pay loans before they mature.
Prior to DLF's stock offering, India's biggest IPO came from Britain's Cairn Energy, which listed its Indian subsidiary on the local stock exchanges last December, raising $1.4 billion.
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