SP group in talks with PE firms to sell Gopalpur port, other assets

The talks with private equities and other investors were initiated after JSW Ports and the Adani group made offers of around Rs 3,000 crore to acquire Gopalpur Port

To facilitate debt repayment, Shapoorji Pallonji (SP) Group has initiated talks with private-equity firms to sell its entire stake in Gopalpur Port, Odisha, and part of the shareholding in infrastructure development firm Afcons Infrastructure by early next year.

Talks with private equities and other investors were initiated after JSW Ports and Adani Group made offers of around Rs 3,000 crore to acquire Gopalpur Port, but that did not meet the group’s valuation expectations.

A plan to sell stake in Afcons Infrastructure through an initial public offering is also on the table, said a source close to the development. 

SP Group did not respond to an email query sent on Saturday.

The group flagship, Shapoorji Pallonji Company Pvt Ltd (SPCPL), has a principal repayment of Rs 165 crore due by March and another Rs 1,035 crore due next financial year and wants to complete the asset-sale transactions before March, the source said.

In June this year, the billionaire Mistry family, the promoter of the 150-year-old group, had raised Rs 14,300 crore by pledging Cyrus Investments’ stake in Tata Sons. The group holds 18.4 per cent in Tata Sons via its two investment companies, Cyrus Investments and Sterling Investments. The proceeds were used to refinance the existing borrowing raised at promoter level and to refinance debt maturing at various group entities.

In the past two years, the holding firm sold its stake in Eureka Forbes, Sterling and Wilson Renewable Energy, and SP Jammu Udhampur Highway to bring its debt significantly down. Due to these sales, the consolidated debt of the firm came down from Rs 37,170 crore as of August 2020 to Rs 20,600 crore as of June this year. Bankers said after including the debt at the promoters’ level, additional asset sale was needed.

The group plans to sell its vast real estate bank and raise funds from other debtors from West Asia in the next three-six months.

The group has proposed to simplify its structure with SPCPL emerging as a construction business entity while the rest of its subsidiaries, including the real estate vertical, to be owned directly by the promoters. The reorganisation will help to reduce debt at SPCPL.

As of now, most of the groups’ businesses such as construction; engineering, procurement and contract; oil and gas; real estate; renewable power; ports; roads; and shipping and logistics are held by SPCPL as subsidiaries, and associate companies.