Debt-laden Shapoorji Pallonji Group is leveraging renewed hopes of a potential exit from Tata Sons to significantly reduce its borrowing costs as it returns to the bond market. The conglomerate's subsidiary, Goswami Infratech Pvt. Ltd, is planning to raise between ₹20,000 crore and ₹25,000 crore through three-year high-yield bonds primarily to refinance existing debt.
Bankers Bet on Tata Sons Development
Market participants tracking the deal reveal that Deutsche Bank, leading the fundraising effort, is pitching investors a coupon rate of 15-16% - substantially lower than initial expectations of around 19.75%. This aggressive pricing strategy hinges entirely on anticipated positive developments involving Tata Sons.
The banking consortium is betting that recent changes in Tata Trusts' leadership, particularly Noel Tata's appointment as chair, could facilitate either a Tata Sons listing or a structured buyout of SP Group's 18.38% stake. According to sources familiar with the matter, the pitch to investors emphasizes that Noel Tata might convince trustees to approve a listing or arrange an exit for the SP Group through stake buyback or bringing in new investors.
Stakes and Timelines
The proposed bond issue comes with clearly defined scenarios. If positive developments signaling SP Group's exit from Tata Sons materialize within the next few months, the bond pricing could settle at 15.75-16% with a reduced tenure of 18-24 months. However, without such developments, the pricing would revert to the original 19.75%.
This fundraising is crucial for Goswami Infratech, which needs to refinance its ₹14,300-crore bond maturing on 30 April 2026. The existing bond was issued in 2023 at a steep coupon rate of 18.75%.
Prakash Agarwal, partner at Gefion Capital, noted that the SP Group's previous high-cost fundraising was more about timing than fundamental credit weakness. "Secondary yields later dropped to nearly 16%, reflecting the market's view that eventual monetization of the Tata Sons stake will comfortably cover the debt," Agarwal stated.
Tata Trusts' Stance and Market Sentiment
While Tata Trusts historically opposed SP Group's demand for a Tata Sons IPO, recent developments suggest potential movement. Mint reported on 24 September that Tata Trusts has directed Tata Sons chairman N. Chandrasekaran to continue discussions with SP Group regarding an exit route while exploring options to keep Tata Sons private.
A third source familiar with Tata Trusts' discussions confirmed that trustees have unanimously authorized Chandrasekaran to negotiate with SP Group on a possible exit. "Once that is done, Chandra has to come to Tata Trusts to convince them," the person revealed.
The context is complicated by a Reserve Bank of India mandate requiring large non-bank financiers, including Tata Sons, to list by 30 September - a deadline that has passed. Listing the holding company of the $300 billion conglomerate would be a massive undertaking.
On 10 October, SP Group reiterated its call for a public listing, describing it as "not merely a financial step — it is a moral and social imperative" that would unlock value for over 12 million shareholders of listed Tata companies.
Market participants confirm that even the remote possibility of Tata Sons listing or agreeing to a structured buyout of SP Group's stake is already influencing market sentiment. As one source summarized, "Price compression will happen only if there is a positive development, but bankers believe that Noel Tata is in a position now to push that conversation forward."
The SP Group has navigated multiple stress cycles in recent years through refinancing, asset sales, and private credit markets. The group has already divested Eureka Forbes, Gopalpur Port in Odisha, and several real estate assets to meet obligations. However, substantial debt remains, with bonds maturing next April requiring immediate attention.
