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India’s Biggest Real Estate Co. Banned

India’s Biggest Real Estate Co. BannedIndia’s Biggest Real Estate Co. Banned

An Indian financial market regulator said Monday it had barred the country’s biggest real-estate company DLF from the securities market for three years for allegedly defrauding investors.

The Securities and Exchange Board of India (SEBI), which has been seeking to improve sometimes murky investment standards, accused the company of “active and deliberate” suppression of important information at the time of a 2007 initial public offering (IPO), AFP reported Tuesday.

The order was one of the toughest ever handed down by regulatory authorities, and would block debt-laden DLF from raising money through the sale of stocks or bonds. It has been hoping to raise funds to pay down some of the debt.

The New Delhi-based company denied any wrongdoing in a statement late Monday, saying it was “confident of the vindication of its stand” against the accusations leveled by the regulator and added that it “has full faith in the judicial process”.

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,” describing the violations as serious.

The regulator imposed no fine on the company but barred DLF and six people, including the company’s billionaire founder and chairman K.P. Singh, from any sale, purchase or other dealings in the security markets for three years.

SEBI said it was issuing the order “to protect the interests of investors and the integrity of the securities market”. The ban would take effect immediately, it added.

The ruling is another blow for DLF, which had debt totaling 190 billion rupees ($3b) as of June 30, 2014. The firm constructs apartment towers, office blocks and other buildings.

DLF’s IPO raised 92 billion rupees -- at that point India’s biggest-ever -- though the value of its shares has been hammered in recent years.

Shares in DLF, which has been buffeted by other regulatory problems and accusations of shady land dealings, were trading at just 146.90 rupees on Monday, but once rose as high as 525 rupees.

 

Financialtribune.com