Shapoorji Pallonji Group Secures Massive ₹215 Billion Funding Boost to Refinance Debt
India's prominent industrial conglomerate, Shapoorji Pallonji Group (SP Group), has successfully finalized a long-delayed fundraising exercise to stabilize its financial position.Sources confirmed on Friday that the group accepted bids totaling ₹215 billion ($2.25 billion) for a three-year rupee bond issue. This significant liquidity injection is primarily intended to refinance the group's existing debt obligations.
Strategic Structure of the Rupee Bond Issue
The funding was orchestrated through an internal investment mechanism where one SP Group entity invested in another to facilitate the transaction. The group successfully closed the subscription for the three-year zero-coupon rupee bonds, which offer a yield of 18.95%.The issuance is scheduled to settle this coming Monday. These bonds are notably secured by the group's substantial stake in Tata Sons, held through Cyrus Investments.
Key Investors and SPV Involvement
A major component of the fundraising involved Mauritius-based SP Group entity Mercury Finance. The entity acted as a key investor in the rupee tranche after successfully raising $650 million via three-year dollar bonds at a 14.50% yield.Mercury Finance invested the entire proceeds from its dollar bonds into the rupee issue. Sources indicate that large private credit funds also participated in the subscriptions, though their identities remain undisclosed. Deutsche Bank served as the sole arranger and participated as an investor in the transaction.
Monetization of Tata Sons Stake to Assure Creditors
As a critical component of the deal, investors were provided with specific assurances regarding the group's long-term liquidity. The SP Group has committed to monetizing a portion of its stake in Tata Sons through either a listing or a share sale within the next 18 months.The group currently holds approximately 18.4% of Tata Sons, making it the company's largest minority shareholder. This stake serves as the primary collateral for the newly secured bonds.
Previous Funding History and Debt Maturity
This transaction follows a series of aggressive fundraising efforts by the group to manage its liabilities. In June 2023, SP Group company Goswami Infratech raised ₹143 billion through zero-coupon bonds at an 18.75% yield.The maturity of those specific notes has been extended twice recently, with the final deadline set for July 31. The total estimated payout for that specific issuance, including interest, currently stands at approximately ₹145 billion.
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