Shapoorji Pallonji Group in final lap to raise nearly Rs 28,600 crore debt

Over a dozen investors keen on buying the bonds that may be backed by the group's stake in Tata Sons

Over a dozen financial firms worldwide are keen to participate in the Shapoorji Pallonji Group’s $3.3 billion (around ₹28,600 crore) debt-raising efforts, underscoring investors’ appetite for the real estate and construction giant’s financial strategy.

 

The private credit — India’s largest — is being raised by Evangelos Ventures Pvt Ltd, a promoter entity.

 

Proceeds of the fundraise would be used to repay loans of the group's real estate and infrastructure companies, said a banker close to the transaction.

 

The group is targeting to close the transaction as early as next week and list the bonds on the stock exchanges.

 

The three-and-a-half year tenure bonds may be backed by the SP Group’s stake in Tata Sons, the unlisted holding company of the Tata Group.

 

While the final terms and conditions are still being negotiated, bankers said the bondholders will receive grossed-up interest.

 

Grossed-up interest refers to the interest amount that has been adjusted to the account for taxes that will be deducted at source.

 

Hence, the effective interest rate on bonds would be in the high teens for the group.

 

The debt is being arranged by Deutsche Bank. An email sent to the SP Group on March 13 did not elicit any response. Deutsche Bank also declined to comment.

 

Among investors, Ares Management Corp, Cerberus Capital Management LP, Davidson Kempner Capital Management, and Farallon Capital Management are leading the race, according to Bloomberg.

 

Ares, Cerberus and Farallon did not reply to Bloomberg’s emailed queries. Davidson Kempner declined to comment.

 

The SP Group is one of India’s oldest business houses and is credited with constructing some of the country's iconic buildings, including that of the Reserve Bank of India (RBI).

 

In June 2023, according to rating agency CARE, the group’s promoters raised ₹14,300 crore through Cyrus Investments (CIPL), which holds a 9.2 per cent stake in Tata Sons.

 

The proceeds were used to refinance existing borrowings raised at the promoter level and to refinance debt maturing at group entities.

 

The management articulated that the group is at an advanced stage of fundraising through Sterling Investment Corporation Pvt Ltd (SICPL) shareholding which also holds a 9.2 per cent stake in Tata Sons, the rating firm said.  SICPL is the investment vehicle of the SP Group.

 

During the ongoing financial year, as part of the group’s restructuring, Shapoorji Pallonji Real Estate Private (SPREL) was formed as the real estate holding company.

 

Some of Shapoorji Pallonji and Company Private Limited’s (SPCPL’s) real estate assets have been transferred to SPREL.

 

SPCPL is the flagship company of the SP Group.

 

The company plans to monetise the real estate vertical in the next two to three years. This is expected to finance debt at promoter-level entities, CARE had said in a statement in October last year. 

Mega fundraise

 

> Proceeds to be used for repaying older loans

> Ares Management, Cerberus Capital, Davidson Kempner Capital, Farallon Capital among lenders

> SP group may pledge Tata Sons shares

> Group may monetise real estate assets

 

(With inputs from Jaden Mathew Paul)