India's biggest property developer DLF saw $1.2 billion wiped off its stock market value Tuesday after regulators barred the company from selling shares and bonds, alleging it had sought to defraud investors.
The Securities and Exchange Board of India (SEBI), in one of the toughest orders handed down by financial regulators, accused DLF of "deliberate suppression of important information" in the 2007 initial public offering (IPO).
DLF's shares slid 29 percent to close at 104.9 rupees on the Bombay Stock Exchange -- slashing 74.38 billion rupees ($1.2 billion) off the firm's share market value.
The order would block debt-laden DLF, its billionaire founder-chairman Kushal Pal Singh and five other people, from any sale, purchase or other dealings in the security markets for three years.
The others barred from trading include his son, Rajiv Singh, who is company vice-chairman, and daughter Pia Singh, a DLF director.
It was the latest blow for the New Delhi-based firm, which pioneered development of the Indian capital's fast-growing satellite city Gurgaon.
DLF, which builds apartment complexes, malls and office towers, has been hard hit by weak home sales triggered by the country's sharp economic slowdown.
The SEBI ban means it will be unable to tap financial markets to raise funds and reduce its 190-billion-rupee ($3-billion) debt.
The SEBI order "banning DLF from capital market exercises for three years is a big negative development", Macquarie Capital Securities India said in note to clients, adding the company might have to "resort to large asset sales to reduce debt".
DLF could face a liquidity crisis if real estate sales fail to pick up, Ambit Capital brokerage analyst V. Krishnan told the Economic Times daily.
The real-estate company, India's biggest listed property developer with annual turnover of 100-billion rupees, told investors it had not contravened "the law either during its initial public offer or otherwise".
DLF said in a statement it had been guided by "eminent legal advisors" in preparing the IPO documents and promised to "defend itself to the fullest extent".
It said it was confident of "vindication".
SEBI accused DLF of seeking "to mislead and defraud the investors and the securities market" in its IPO, citing an alleged failure to report pending legal cases and other important information.
DLF can appeal the order to the Securities Appellate Tribunal.
Perceived as close to the opposition Congress party ousted from power in May's general elections, DLF is also battling accusations of other financial improprieties, including alleged abuse of market dominance in apartment sales.
DLF raised $2.3 billion in India's biggest-ever IPO at the time, priced at 525 rupees a share.
SEBI said it was issuing the order "to protect the interests of investors and the integrity of the securities market".
DLF last made major headlines over allegations of shady land dealings involving Indian businessman Robert Vadra, the son-in-law of Congress opposition leader Sonia Gandhi. Both Vadra and DLF have denied wrongdoing in that matter as well.