Shapoorji Pallonji (SP) Group has successfully completed its ₹25,500 crore bond issue, attracting bids worth ₹21,350 crore for the three-year debt instrument. According to The Economic Times, the fundraising campaign was primarily designed to refinance the conglomerate's existing debts while investors showed strong interest, with many participating for the first time. The bond's repayment is structured to hinge on either Tata Sons going public via an IPO or a settlement with SP Group within 18 months.
The record fundraising is finding new investor classes through private wealth platforms, with the unrated, unlisted debt being offered to high-net-worth individuals (HNIs), ultra-HNIs and family offices through private wealth managers. As reported by The Economic Times, the bond's repayment structure provides investors with exposure to the value of the holding even as uncertainty persists over when, or if, Tata Sons will go public. Recent central bank regulations classifying large entities like Tata Sons as upper-layer NBFCs significantly increase the likelihood of a listing, potentially aiding SP Group's asset monetization efforts.
Wealth management firms including LGT Wealth India, JM Financial, and Nuvama Wealth Management Ltd are offering minimum ₹10 crore ticket sizes in the debt instrument issued by Equizen Investments Pvt. Ltd, a wholly-owned special purpose vehicle of the SP Group promoters. According to Moneycontrol, the three-year, zero-coupon NCDs offer an annualised yield of around 18.95% and are being pitched to HNIs in secondary market transactions. The securities are described as offering "equity-like returns with senior debt protection" and emphasize the value of collateral and potential SP Group monetization of its Tata Sons holding.
The bond issue includes comprehensive collateral backing with the SP Group promoters owning 18.37% of Tata Sons through Cyrus Investments Private Limited and Sterling Investment Corporation Private Limited. As reported by Moneycontrol, the Equizen debentures have an exclusive pledge over the 9.185% Tata Sons holding owned by Cyrus Investments, plus a pledge on 25% holding in listed infrastructure company Afcons Infrastructure, 100% of Equizen and Cyrus Investments shares, and charges over issuer assets. The note estimates the look-through value of Tata Sons at ₹12.54 lakh crore, valuing the pledged 9.185% interest at approximately ₹1.15 lakh crore, resulting in an initial loan-to-value ratio of 22.1% against the total debt of ₹25,500 crore.
The SP Group has reduced its ₹28,500 crore refinancing by ₹3,500 crore and is seeking a two-month extension on ₹14,300 crore of maturing bonds. According to The Economic Times, delays in debt raising, initially impacted by rising hedging costs, are forcing the conglomerate to negotiate more time with creditors. The refinancing, arranged by Deutsche Bank, is now expected to close later this summer. The group is also raising $2.7 billion in private credit, attracting interest from global giants like BlackRock and local firms, backed by an 18% stake in Tata Sons.
