New Delhi: India’s biggest property developer DLF saw more than a quarter of its stock market value wiped out Tuesday after financial regulators barred it from selling shares or bonds, alleging it sought to defraud investors.
The Securities and Exchange Board of India (SEBI), which has been seeking to clean up the nation’s sometimes murky investment standards, accused the company of “deliberate” suppression of important information at the time of a 2007 initial public offering (IPO)”.
DLF’s shares sank 25.6 per cent to 109.15 rupees on the Bombay Stock Exchange — slashing about 60 billion rupees ($1.2 billion) off its value. It is also sharply down from its debut price of 525 rupees.
The order, one of the toughest handed down by regulators, would block debt-laden DLF, its founder-chairman K.P. Singh and five other people from any sale, purchase or other dealings in the security markets for three years.
It is the latest blow for the New Delhi-based firm, which pioneered development of the Indian capital’s fast-growing satellite city Gurgaon, and which has been hard hit by the country’s sharp economic slowdown.
The company, India’s biggest by revenues, has denied any wrongdoing and told investors in a statement it had “not acted in contravention of the law either during its initial public offer or otherwise.
It promised to “defend itself to the fullest extent” against the accusations and said it was “confident of the vindication of its stand”.
SEBI said DLF had sought “to mislead and defraud the investors and the securities market in connection with the issue of shares of DLF in its IPO”.
The SEBI order cited an alleged failure to report important information about its subsidiaries as well as inform investors on legal cases it was facing at the time of its IPO.
Perceived as close to the opposition Congress party that was ousted from power in May’s general elections, DLF is also battling allegations of other financial irregularities.
The company, which builds apartment complexes, malls, office blocks and other buildings, had been hoping to take advantage of a sharp rise in India’s stock market to raise funds to pay down some of its 190 billion rupee debt.
DLF’s raised 92 billion rupees in India’s biggest ever IPO at the time.
SEBI said it was issuing the order “to protect the interests of investors and the integrity of the securities market”. The ban on DLF engaging in any securities trade would take effect immediately.
DLF last hit the headlines over allegations of shady land dealings involving the son-in-law of Congress opposition leader Sonia Gandhi. Both Vadra and DLF have denied wrongdoing in that matter as well.
