Shapoorji Group in talks with credit funds for record $3.3 bn pvt debt deal

By Saikat Das and Nic Querolo 

India’s Shapoorji Pallonji Group is in advanced talks with top global private credit funds as it aims to raise as much as $3.3 billion in the country’s biggest-ever local currency private debt deal, according to people familiar with the matter. 

Investors in discussion for the deal include Cerberus Capital Management LP, Davidson Kempner Capital Management and Varde Partners LP, said the people who asked not to be identified discussing private information.  

Deutsche Bank is the sole arranger for the deal, they added. Other investors in talks include Farallon Capital Management, Ares Management Corp. and EAAA India Alternatives Ltd., said the people.

 

Lenders are familiar with Shapoorji Pallonji, a Mumbai-based construction and real estate conglomerate after one of its units sold India’s biggest high-yield rupee bond in 2023 and has faced challenges repaying its debts. The group is controlled by billionaire Shapoor Pallonji Mistry, whose family is the fourth-richest in Asia, according to Bloomberg-compiled data.

 

The new deal would deepen India’s private credit industry, which is expanding as Prime Minister Narendra Modi’s infrastructure push drives demand for middle-market funding in everything from solar power to roads.

 

Proceeds will primarily be used to refinance existing debt, the people said, adding that the process of documentation for finalizing term sheets will start soon. The firm will use various real estate properties of the group, along with other assets, as collateral, the people said. Terms are not yet finalized and could change.  

 

An Ernst & Young report said private credit investments in India totaled $9.2 billion across 163 deals last year, while warning that increased competition in the performing credit space was making it harder to close deals and leading to lending standards being compromised.

 

Shapoorji Pallonji, Cerberus, Farallon and Varde didn’t immediately reply to requests for comment. Ares, Davidson Kempner, Deutsche Bank and EAAA India Alternatives declined to comment.

 

Negotiations are ongoing over the likely yield of the rupee-denominated bonds, which could be in high teens, the people said. Bonds are expected to be launched as early as in March, they added.

 

In 2023, Goswami Infratech Pvt., a unit of Shapoorji Pallonji, raised Rs 14,300 crore ($1.6 billion) through what was at the time the country’s largest ever low-grade local currency bond.