MUMBAI: Construction and engineering conglomerate Shapoorji Pallonji & Companay (SP), which has a debt of close to Rs 60,000 crore in its book, is on course to raise Rs 29,000 crore credit to refinance its costly forex debt maturing by late May. More importantly, as much as 75% or around Rs 22,000 crore of this will be raised in rupee, making it the largest such private credit mop-up in the country, and over a dozen investors are readying their term-sheets.
Late last year, the SP was on the verge of signing an agreement with the state-run Power Finance Corporation to raise Rs 20,000 crore. But the deal fell apart at the last leg of the negotiations which sources attributed to the lender’s apprehension about the high leverage of the group.
The SP Group is planning to mop up as much as 75% of its close to Rs 29,000 crore, from five funds, which will make it India Inc’s largest private credit raising in the rupee, two sources in the know of the dealings told The New Indian Express on Friday.
The funding is likely to be closed next week or in the first week of April, one of the sources said.
According to these sources, five private credit funds, including Davidson Kempner Capital Management, Cerberus Capital Management, Ares Management, Farallon Capital Management and One Investment Management are set to extend around Rs 22,000 crore funding that the Group needs to refinance its dollar debt.
Of these five, Farallon Capital and One Investment are existing creditors to the diversified group.
According to sources, more than a dozen investors are participating in the fund-raising programme, with completion anticipated by early April.
The 160-year-old Shapoorji Pallonji Group, known for constructing iconic structures in Mumbai like the RBI headquarters, will use the funds to refinance existing debt raised against its promoters’ 18.6% stake in Tata Sons, the holding company of the $165-billion Tata Group.
The funds are being raised by Evangelos Ventures, equally owned by SP Group chairman Shapoor Mistry and his nephews Firoz Mistry and Zahan Mistry.
The rupee-denominated bonds, likely to be in the 3.5 year tenor, will carry a higher interest rates, given the already high leverage of the group and may range close to 20% range. The debt will be listed on the bourses.
In 2022, Goswami Infratech, which owns 25% of SP Group company Afcons Infrastructure, which recently went public with a Rs 5,400-crore IPO, had secured $1.6 billion (then about Rs 14,300 crore) from a group of 10 investors at 18.75% interest. Evangelos will also be responsible for the tax obligations on investors’ interest earnings.
The Group, one of oldest business houses in the country, has a debt of around Rs 60,000 crore, with half belonging to the promoters (the Mistry family) and the rest with operating real estate and construction companies.
Proceeds from the fundraise will be used to repay loans of the group's real estate and infrastructure companies, said one of the sources cited above.
Sterling Investments, the main holding company of the group, holds a little over 9% in Tata Sons, while other group entities own the remaining stake in the country’s largest conglomerate. This means the SP group’s stake is worth over $30.5 billion.
The SP group did not respond to calls seeking confirmation.
The group has been looking for fund-raising since early 2024 but without much success. Most of its existing debt was maturing in May 2024. Since then, it got an extension from creditors by paying the interest. And most of the group’s debt is linked to the group's promoter entity, Sterling Investments, which had secured $2.6 billion in 2021 from alternative investment manager Ares Management and the hedge fund Farallon Capital with a tenor of 3.5 years.
Davidson Kempner is an alternative investment management firm based in New York since 1983 managing over $39 billion, whereas Cerberus Capital, also based in New York, is a global alternative investment advisor since 1992 managing around $65 billion in assets across complementary credit, private equity etc., and the Los Angeles-based Ares Management has been operating in the credit, private equity and real estate markets since 1997 and manages over $300 billion assets.
The San Francisco-headquartered hedge fund Farallon Capital primarily manages capital for university endowments, foundations, and high-net-worth individuals. Founded in 1985 it manages assets worth $39 billion. Both the group have lent money to the SP group earlier.