After intense debate with bankers, the company settled for 500-550 rupees a share band, against its earlier expectation for up to 600 rupees, one source said.
The sale, which opens for subscription June 11-14, comes at a time when the red-hot real estate sector faces turbulence from a sharp rise in interest rates that is slowing demand for homes.
This is the second attempt by New Delhi-based DLF to go public after it scrapped plans a year ago following a stock market meltdown and some disputes with minority shareholders.
At the time, the IPO was expected to raise up to $3.5 billion.
While some analysts are still skeptical about the prospects for property developers.
"India's real estate market is in pain," Citigroup said in a report this month.
"The consensus view is almost unanimous that property prices are set to fall. It's pretty tough for the country's property developers."
Citigroup, which recommended "sell" of stocks in companies such as Unitech Ltd. and Parsvnath Developers Ltd. added:
"Transaction volumes are drying up, higher interest rates and prices have damaged affordability, developers are suffering regulatory and capital markets squeeze, supply is impending."
DLF is selling 10.27 percent of the company, or 175 million shares. It would have been difficult to sell the shares at 600 rupees, but there is investor appetite for property stock, one investment banker said.
ICICI Securities said excess supply worries were overdone.
"Oversupply concerns are overdone though sporadic drop in prices in overheated markets cannot be ruled out," it said in a report. "The real estate sector has all the trappings of a winner."
DLF's valuation is expected to have dropped to about $23 billion, from an estimated $25-$27 billion in May last year, when it called off the offering, analysts said.
It would still become the biggest real estate firm when it is listed, ahead of Delhi-based rival Unitech Ltd. that has a market value of $11.3 billion after nearly tripling in the past one year.
India's biggest IPOs to date were by state-run utility NTPC Ltd., software services leader Tata Consultancy Services Ltd. and energy firm Cairn India Ltd., all three raising slightly under $1.2 billion.
DLF, which has developed 220 million square feet of property, said in March it had formed an equal joint venture with Dubai's Nakheel to invest more than $10 billion to build two townships.
Kotak Mahindra and DSP Merrill Lynch are the lead arrangers for the issue, with Citigroup, Deutsche Bank, ICICI Securities, Lehman Brothers, UBS and SBI Capital Markets.
Source :Just Samachar
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