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Shapoorji Pallonji (SP) Group is in the process of raising USD 3.3 billion (approximately INR 28,600 crore) in what is being recognised as India's largest domestic currency private debt arrangement. A consortium of five private credit funds, including Davidson Kempner Capital Management, Cerberus Capital Management, and Ares Management Corp, is contributing 75% (around USD 2.5 billion) of the funding. The funding, expected to conclude by early April, will be utilised for refinancing existing debt secured against the promoters' 18.4% stake in Tata Sons. Evangelos Ventures, owned equally by SP Group chairman Shapoor Mistry and his nephews, is facilitating this financing. The rupee-denominated bonds will have a high-teens interest rate, extend over 3.5 years, and will be listed on the BSE.
A consortium of five private credit funds-Davidson Kempner Capital Management, Cerberus Capital Management, Ares Management Corp, Farallon Capital Management, and One Investment Management-is set to provide 75% (approximately USD 2.5 billion) of the USD 3.3 billion (approximately INR 28,600 crore) funding that Shapoorji Pallonji (SP) Group is in the process of raising. This transaction marks the largest private debt arrangement in India denominated in local currency. Advertisement
The rupee-denominated bonds, which carry a high-teens interest rate, are expected to have a tenure of 3.5 years and will be listed on the Bombay Stock Exchange (BSE). In total, as many as 15 investors are anticipated to participate in the SP Group's fund-raising initiative, with financial closure expected over the coming weeks.
The 160-year-old SP Group, renowned for constructing several iconic structures in Mumbai, including the Reserve Bank of India (RBI) building, intends to utilise the funds primarily to refinance its existing debt. This debt was previously raised against the Mistry family's 18.4% stake in Tata Sons, the holding company of the USD 165 billion Tata Group.
The capital is being raised through Evangelos Ventures, an entity jointly owned by SP Group chairman Shapoor Mistry and his nephews, Firoz Mistry and Zahan Mistry. In 2022, Goswami Infratech-which holds a 25% stake in SP Group's subsidiary Afcons Infrastructure-had raised USD 1.6 billion (approximately INR 14,300 crore at the time) from a consortium of 10 investors at an interest rate of 18.75%. The current round is expected to be priced higher than the previous issuance. Evangelos Ventures will be liable for the tax obligations on interest earnings accruing to the investors.
SP Group's total debt is estimated to be in the range of INR 55,000 crore to INR 60,000 crore, split evenly between the promoters (the Mistry family) and the operating real estate and construction businesses of the group.
The INR 28,600 crore fund-raise will be channelled towards refinancing the debts of both Goswami Infratech and the promoters, with the remainder earmarked for addressing debt obligations at the group's operating entities. Notably, bonds issued by Goswami Infratech are scheduled to mature later this month.
This latest fund-raising exercise comes on the heels of a failed attempt last year by SP Group to raise INR 20,000 crore from Power Finance Corporation. Despite undertaking asset sales and listing several group entities through initial public offerings, concerns regarding the group's leveraged balance sheet persist. The group's financial position has been further impacted by working capital constraints and the burden of high-cost construction projects, post the Covid-19 pandemic and the IL&FS crisis.
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