Indian property developer DLF said on Friday that it plans to invest about 37.5 billion rupees (INR), or 3,750 crore, for a majority stake in a joint venture with Singapore-based Everstone Group that would buy into the Indian companies of the IREO real estate group.

The deal gives DLF a route into a large pool of land in the National Capital Region without buying it outright, and it brings a Singapore investment manager into one of India's most closely watched housing markets. For investors in Asia, it is also a test of how India's cash-rich developers plan to deploy their balance sheets as the residential cycle matures.

How the DLF and Everstone deal is structured

DLF and Everstone signed a binding and exclusive term sheet dated Nov. 6, according to a press release DLF filed with the National Stock Exchange of India. The joint venture would hold an economic interest in IREO Private Ltd. and other IREO group companies in India, which are owned by IREO's foreign direct investment funds.

Under a second binding term sheet signed the same day with those funds, the venture intends to acquire a stake of at least 20% in the IREO India companies, along with certain governance rights. Counting contractual and other interests, the venture's total economic interest would be about 40%, DLF said. The IREO funds would hold the remainder.

After completion, an independent management team would run the IREO companies under an agreed business plan, with DLF and Everstone providing guidance. DLF said the aim is to restore momentum and unlock growth at the business, which it said has strategic locations in Delhi, Gurugram and other regions.

The transaction still needs due diligence, corporate, regulatory and third-party approvals, and definitive documents. DLF expects it to close during 2027 and said it would make a detailed exchange disclosure once those documents are signed.

The Hindu newspaper described the IREO FDI Fund as India's first and largest real estate private equity fund, with substantial land banks in the National Capital Region and interests in about two dozen projects across the country.

Ashok Kumar Tyagi, DLF's managing director, said in the release that the partners look forward to "unlocking the growth potential" of the IREO companies. Everstone, which says it manages assets of more than 1 trillion rupees across real estate, private equity, infrastructure, credit and venture capital, is led by co-founder and Chief Executive Sameer Sain.

DLF's balance sheet and earlier IREO land deal

DLF can fund the commitment from cash on hand. The Gurugram-based developer reported net cash of 150.84 billion rupees at the end of September, even after paying dividends of 19.8 billion rupees during the quarter, according to its September-quarter results release.

Consolidated net profit for the three months to Sept. 30 rose 11% from a year earlier to 13.01 billion rupees on revenue of 22.98 billion rupees. Group Chief Financial Officer Badal Bagri told analysts on the Oct. 16 earnings call that revenue included a one-time gain of 7.38 billion rupees, booked as other income, from the revaluation of an investment in a joint venture company. New sales bookings were about 38 billion rupees in the quarter, helped by a complete sellout of Aureva, a luxury retirement housing project in Gurugram.

The new deal builds on an earlier transaction. On the same call, Tyagi said DLF had acquired bonds about two years ago that gave it roughly 28.5 acres of land from IREO in Sector 61. About 19.5 acres had already been conveyed, and encumbrances on a further 7.06-acre parcel were cleared in the September quarter, when DLF completed payment for it. DLF also agreed to a collaboration on an adjoining 7.48 acres, which would take the contiguous site to about 36 acres. Tyagi said the proceeds from that land go to lenders of the company concerned, and that DLF hoped to conclude the whole transaction by the fourth quarter of the fiscal year, which ends in March.

What DLF investors are watching next

The IREO venture adds to a launch pipeline that DLF executives said depends largely on approvals. Managing Director and Chief Business Officer Aakash Ohri said on the call that DLF is preparing a Mumbai launch for the October-to-December quarter and a Gurugram project after that. Tyagi said a luxury project in DLF Phase 4 is scheduled for the January-to-March quarter.

The rental arm is also growing. DLF's leased portfolio covers about 50 million square feet, with occupancy of 96% by area and 97% by value, Bagri said, its highest level.

Tyagi told analysts the first quarter of the fiscal year had been quiet for pre-sales and that the company expected a couple more launches in the following two quarters. Tyagi said he hoped to speak with investors again in January, and DLF's detailed disclosure on the IREO venture is due once definitive agreements are signed.