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Volume IconTata-Mistry battle: Can debt-ridden SP Group monetise its crown jewel?

The 70-year ties between Tata Group and SP Group have gone from sweet to sour in last few years. Mistrys want to exit Tata Sons and liquidate their stake. Will they succeed? Listen to this podcast

Ratan Tata, Cyrus Mistry, Tata Group

Ratan Tata and Cyrus Mistry

Reeling from a debt of more than Rs 20,000 crore, the 156-year-old Shapoorji Pallonji group is said to be nearing a deal with a foreign investment firm to pledge a part of its stake in Tata Sons and raise about Rs 8,000 crore.

It holds an 18.4 per cent stake in Tata Sons, the holding company of India’s largest conglomerate. Media reports suggest that the funding deal might close in the next few weeks.

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Though the SP Group is of the view that it does not need the Tatas’ permission to pledge its stake, the deal could face hurdles if the Tata group objects. It has to be noted that the Tatas had foiled the SP group’s attempts last year to raise funds from Canada’s Brookfield Asset Management.

The SP group has a total debt of Rs 20,000 crore, of which Rs 12,000 crore is under a moratorium till 2023.

SP Group promoters, the Mistry family, had offered to exit Tata Sons last year after their 70-year association soured following the removal of Cyrus Mistry as Tata Sons chairman.

The Tata group offered to buy out the SP group’s stake, but the two sides differed on its valuation. While the Mistrys wanted Rs 1.78 trillion for their stake, the Tatas claimed a valuation of Rs 80,000 crore.

Meanwhile, the SP group is trying to sell some of its non-core assets to pare its debt as part of a restructuring deal it has struck with lenders. Its core construction business has been hit badly due to the economic slowdown in the past few years and the Covid-19 pandemic.

It has also agreed to sell a majority stake in Eureka Forbes at an enterprise value of Rs 4,400 crore to global private equity company Advent International. Eureka Forbes is known for the Aquaguard brand, a household name in water purification, besides
Forbes vacuum cleaners. The group is further trying to sell Sterling & Wilson Solar, one of the country’s largest solar companies, and the construction and engineering company Afcons Infrastructure. In April last year, the group sold five solar assets to KKR & Co for Rs 1,550 crore.

Now, will the Shapoorji Pallonji group be able to monetise its stake in Tata Sons this time? Let’s wait and watch.

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First Published: Sep 24 2021 | 10:56 AM IST

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