India’s market regulator has barred the nation’s largest listed property developer, DLF Ltd, from tapping capital markets for three years in one of the watchdog’s toughest punishments to date.
The ban, a blow to the heavily indebted real estate firm, follows what the regulator said was DLF’s failure to provide key information on subsidiaries and pending legal cases at the time of its record-breaking 2007 initial public offering.
In a 43-page order published on Monday, regulator SEBI said DLF, its billionaire founder and chairman Kushal Pal Singh and five other company executives would be barred from “buying, selling or otherwise dealing in securities.”
DLF raised US$2.3 billion in 2007 at the height of the pre-financial crises euphoria, in what was then India’s biggest market debut.
The property giant said its board was “guided by and acted on the advice of” its legal advisers, merchant bankers and audit firms while preparing the offer documents, and that it would defend itself against the order passed by SEBI.
Monday’s ban means DLF could now struggle to pay down its debt using equity or debt instruments regulated by SEBI. Its debt, which swelled as the firm ramped up land acquisitions before the financial crisis, stood at 191 billion rupees (US$3.13 billion) at the end of June.
New Delhi-based DLF builds homes, offices and shopping centers and is currently developing a 579,120 square-meter retail mall close to the capital, expected to be the biggest in the nation when it is completed next year.
The company, which has about 7,924,800 square meters of leased assets in the nation, is set to also be barred from listing a Real Estate Investment Trust (REIT).
SEBI finalized rules for REITs last month.
DLF has already run into regulatory trouble this year.
Earlier this year, India’s top court upheld a 6.3 billion rupee fine against the company imposed by the antitrust watchdog.
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