SP Group plans to raise $2.7 billion; BlackRock, BofA may chip in

Mumbai: A $2.7-billion private credit sale by the Shapoorji Pallonji Group, which owns a sizeable stake in Tata Sons, has drawn interest from the likes of BlackRock, AllianceBernstein and Bank of America, multiple sources aware of the exercise told ET.

Local investors such as 360 ONE, EAAA India Alternatives and JM Financial are also reportedly lining up for the private credit fundraising for which potential backers are betting on a Tata Sons IPO or stake monetisation. The SP Group owns around 18% of the unlisted Tata Sons, which is facing pressure from multiple stakeholders to go public.

The term-sheet circulated to potential investors also includes milestones linked to a possible listing or settlement agreement within 18 months, said the sources cited above. The fundraising is being undertaken through Eqyizen Investment, an SP Group entity, they said.

The three-year financing, being arranged by Deutsche Bank, includes the group's first-ever US dollar tranche of $1 billion that is expected to offer yields of around 14%, according to people familiar with the matter. Investors evaluating participation in the dollar tranche include LGT Bank among other. one of the sources said.

Alongside the dollar tranche, the group is also raising rupee-denominated debt of around ₹15,000-16,000 crore expected to price at around 18.95%, revised upward from earlier guidance of 18.75%. Some of the existing investors including Ares, Varde Partners, 360 One, Farallon Capital Management, EAAA could participate in this tranche, one of the sources said.

A Deutsche Bank spokesperson declined to comment while spokespersons of SP Group, BlackRock, AllianceBernstein, 360 One, EAAA, Bank of America and JM Financial did not respond to a request for comment.

SP Group had initially targeted closing the transaction by the end of April but delayed the process amid volatility arising from the Iran-Israel war. It is now expected to be priced by May 29 and fundraise to be completed by June 4-5, sources said.

Proceeds will primarily refinance existing high-cost borrowings, including zero-coupon bonds issued by group company Goswami Infratech that carried an effective yield of 18.75%.

The new financing is backed by a 9.185% stake in Tata Sons held through Cyrus Investments.

The fundraising comes amid refinancing pressure at the group. On May 4, CareEdge Ratings downgraded Goswami Infratech's bonds to B+ with a negative outlook from BB-, due to delayed fundraising at the group level, as against earlier envisaged timelines, which has thereby resulted in heightened refinancing risk associated with the NCD repayment.

The company has cited that while the refinancing transaction was set to conclude before April 30, 2026, most debenture holders insisted on extending the redemption timeline, given the prevailing market conditions, CareEdge said in its report.