MUMBAI/NEW DELHI (Reuters) – India’s market regulator has barred the country’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”.
“As far as non-disclosure cases are concerned, this is the biggest case in SEBI’s history and this is by far the biggest punishment they have imposed,” said JN Gupta, a former executive director at the regulator who now runs a shareholder advisory firm.
DLF raised $2.3 billion in 2007 at the height of the pre-financial crises euphoria, in what was then India’s biggest market debut.
“DLF and its board wish to reassure its investors and all other stakeholders that it has not acted in contravention of law either during its initial public offer or otherwise,” the company said in a statement late on Monday.
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 ($3.13 billion) at the end of June.