Earlier, wealth managers were pitching the bonds to HNIs and ultra-HNIs with a minimum investment of ₹10 crore and yields of up to 17.8 per cent.
EquiZen, a wholly owned SP Group promoter entity, has issued ₹21,350 crore of zero-coupon, unlisted, unrated, non-convertible debentures (NCDs) with a three-year tenor. The NCDs have a face value of ₹1 crore and a 12-month make-whole provision.
The financing is being pitched to investors as relatively low-risk because it is backed by collateral. The initial loan-to-value (LTV) is 22.1 per cent, based on a look-through valuation of the Tata Sons stake.
The main security is the 9.185 per cent stake in Tata Sons held by Cyrus Investments. The security package also includes a pledge over 25 per cent of Afcons Infrastructure held by Goswami Infratech and 100 per cent of the shares of EquiZen and Cyrus Investments. It charges over EquiZen’s assets and any proceeds or dividends from the Tata Sons stake.
The SP Group promoter family owns a total of 18.37 per cent of Tata Sons through Cyrus Investments and Sterling Investment Corporation.
The NCDs have a 40 per cent LTV trigger. If the LTV stays above 40 per cent for five consecutive trading days, additional cash, fixed deposits or other approved collateral will have to be provided within 20 business days to bring the LTV back within the specified limit.
Most of the proceeds — ₹17,500-17,800 crore — are to be used to refinance existing NCDs of Goswami Infratech and Capespan NCO (non-share capital option). The remaining ₹3,250-3,850 crore will be used for working capital and growth requirements.
The structure also requires SP Group to shrink its debt. It mandates repayment of ₹11,275 crore within 24 months and requires a resolution or heads of terms for a Tata Sons initial public offering within 18 months. The documents also provide for repayment through the sale of assets or monetisation of the Tata Sons stake, with proceeds from such sales required to be used for redemption of the NCDs or placed in an escrow account.
The lowering of the threshold for SP Group’s bonds comes days after the Reserve Bank of India (RBI) rejected Tata Sons’ request for exemption from the core investment company category — a move that effectively mandates a public listing for the salt-to-software conglomerate.
The mandatory listing of Tata Sons is expected to tighten the yields on SP Group’s high-yield bonds, as it would give the debt-laden group much-needed liquidity to repay its debts.
The investment entity flagged the high probability of value unlocking of Tata Sons’ shares. "We believe that the pressures surrounding the potential realisation of the value of Tata Sons has increased. RBI’s recent guidelines on upper-layer NBFCs has increased that probability, and any direction to list Tata Sons would make SP Group's stake liquid and freely monetizable. Alternatively, Tata Group has initiated discussions with SP Group for a potential negotiated exit," details from the note stated.
The Tata Sons board on Thursday approved the mandatory listing of the holding company (holdco) of the Tata group and a resolution to reappoint Natarajan Chandrasekaran (Chandra) as executive chairman for a third five-year term. Chandra will complete his current term on February 20, 2027, and will then be reappointed for another five years, according to a company statement.
“At the meeting of the board on September 17, Chandra acceded to the board’s request to reconsider his decision. The board thereafter resolved by a majority vote to reappoint him as executive chairman for a further term of five years upon the expiry of his current tenure,” Tata Sons said in a statement.
The holdco added that the board had also resolved to initiate steps to comply with the applicable RBI guidelines and seek guidance from the central bank, Tata Trusts, and other stakeholders on the applicable compliance requirements.
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