Shapoorji Group to Kick Off $2.6 Bn Raise This Week
Real Estate

Shapoorji Group to Kick Off $2.6 Bn Raise This Week

The Shapoorji Pallonji (SP) Group is preparing to initiate a Rs 22,000 crore ($2.6 billion) fundraising campaign this week, targeting alternative asset managers and private credit players. The funds will be used to refinance maturing debt and lower borrowing costs, according to insiders.

This move follows the collapse of a 10-month negotiation with Power Finance Corporation (PFC) last month, where the state-run lender backed out due to high exposure risks. The debt, backed by SP Group’s 18.2% stake in Tata Sons, is now being addressed through a structured three-year, rupee-denominated non-convertible debenture (NCD) offering. Deutsche Bank, acting as the sole bookrunner, will lead roadshows in Singapore and London, followed by other global financial hubs.

In 2021, SP Group's promoter entity Sterling Investments (SIPL) secured $2.6 billion from Ares SSG and Farallon Capital, pledging a 9.1% stake in Tata Sons and real estate assets. Those high-cost NCDs, with interest rates in the sub-20% range, mature in March 2025, necessitating refinancing. The new debt, while expected to have higher rates than the PFC proposal, will likely be lower than the 2021 terms. Existing investors such as Ares and Farallon may participate again.

Earlier this year, Cyrus Investments (CIPL), another SP Group promoter entity, raised Rs 143 billion at 18.75% against a 9.18% Tata Sons stake as collateral, marking India's largest low-rated bond sale. Prominent investors like Cerberus, Davidson Kempner, Deutsche Bank, and Standard Chartered Bank subscribed to this tranche. The group also repaid Rs 730 billion in November using proceeds from Afcons Infrastructure's IPO and the sale of its stake in Gopalpur Port to Adani Ports, leaving Rs 84 billion still outstanding.

Afcons, SP Group's key revenue driver, recently raised Rs 83 billion through a successful IPO, including a pre-IPO anchor book supported by global investors. SP Group has also monetized assets such as Eureka Forbes, Sterling and Wilson, and various road and port assets to reduce debt. Founded in 1865 by Pallonji Mistry, the SP Group is one of India's oldest industrial conglomerates, operating across real estate, construction, infrastructure, solar power, and oil and gas services. Despite challenges, including strained ties with the Tata Group following Cyrus Mistry's removal as Tata Sons chairman in 2016, SP Group has worked to strengthen its financial position through strategic asset sales and public listings.

Analysts note that the group's ability to secure favorable terms in the new fundraising round will depend on market conditions and investor demand, with projected coupon rates ranging between 18-23%. If the principal or interest payments are delayed, the NCD terms include a penalty, increasing the internal rate of return to over 22%. The group has been streamlining its structure, with six entities holding rated debt of Rs 515 billion, comprising bank loans (33%) and bonds (67%), as per IIFL.

The Shapoorji Pallonji (SP) Group is preparing to initiate a Rs 22,000 crore ($2.6 billion) fundraising campaign this week, targeting alternative asset managers and private credit players. The funds will be used to refinance maturing debt and lower borrowing costs, according to insiders. This move follows the collapse of a 10-month negotiation with Power Finance Corporation (PFC) last month, where the state-run lender backed out due to high exposure risks. The debt, backed by SP Group’s 18.2% stake in Tata Sons, is now being addressed through a structured three-year, rupee-denominated non-convertible debenture (NCD) offering. Deutsche Bank, acting as the sole bookrunner, will lead roadshows in Singapore and London, followed by other global financial hubs. In 2021, SP Group's promoter entity Sterling Investments (SIPL) secured $2.6 billion from Ares SSG and Farallon Capital, pledging a 9.1% stake in Tata Sons and real estate assets. Those high-cost NCDs, with interest rates in the sub-20% range, mature in March 2025, necessitating refinancing. The new debt, while expected to have higher rates than the PFC proposal, will likely be lower than the 2021 terms. Existing investors such as Ares and Farallon may participate again. Earlier this year, Cyrus Investments (CIPL), another SP Group promoter entity, raised Rs 143 billion at 18.75% against a 9.18% Tata Sons stake as collateral, marking India's largest low-rated bond sale. Prominent investors like Cerberus, Davidson Kempner, Deutsche Bank, and Standard Chartered Bank subscribed to this tranche. The group also repaid Rs 730 billion in November using proceeds from Afcons Infrastructure's IPO and the sale of its stake in Gopalpur Port to Adani Ports, leaving Rs 84 billion still outstanding. Afcons, SP Group's key revenue driver, recently raised Rs 83 billion through a successful IPO, including a pre-IPO anchor book supported by global investors. SP Group has also monetized assets such as Eureka Forbes, Sterling and Wilson, and various road and port assets to reduce debt. Founded in 1865 by Pallonji Mistry, the SP Group is one of India's oldest industrial conglomerates, operating across real estate, construction, infrastructure, solar power, and oil and gas services. Despite challenges, including strained ties with the Tata Group following Cyrus Mistry's removal as Tata Sons chairman in 2016, SP Group has worked to strengthen its financial position through strategic asset sales and public listings. Analysts note that the group's ability to secure favorable terms in the new fundraising round will depend on market conditions and investor demand, with projected coupon rates ranging between 18-23%. If the principal or interest payments are delayed, the NCD terms include a penalty, increasing the internal rate of return to over 22%. The group has been streamlining its structure, with six entities holding rated debt of Rs 515 billion, comprising bank loans (33%) and bonds (67%), as per IIFL.

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