India's SP Group floats fresh term sheet for debt fundraise, document shows

MUMBAI: India’s Shapoorji Pallonji Group (SP Group) has returned to investors with a revised debt fundraising plan aimed at refinancing existing borrowings, days after an earlier proposal fell through, according to three sources and a term sheet reviewed by Reuters.

Eqyizen Investment, an SP Group company, is looking to raise 255 billion rupees ($2.68 billion) through the sale of three-year zero-coupon bonds, with an additional greenshoe option of 39 billion rupees, according to the term sheet shared with investors on Wednesday.

The bonds will offer a yield of 18.95% and will be secured against SP Group’s stake in Tata Sons held through subsidiary Cyrus Investments, the term sheet showed.

The sources requested anonymity because they were not authorised to speak to the media. SP Group did not respond to a Reuters email seeking comment.

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Monetising Tata sons stake

SP Group, a construction and infrastructure conglomerate, is the largest single shareholder in Tata Sons. Despite financial pressures, it has struggled to monetise its stake in the Tata Group’s unlisted holding company.

A planned fundraising last month involving rupee debt and dollar bonds failed to conclude successfully.

High hedging costs linked to the U.S.-Iran conflict, volatile market conditions and uncertainty over monetising the Tata Sons stake dampened investor appetite for the deal, the sources said.

With hedging costs having eased since then, investor demand may improve, one of the sources said.

Under the revised proposal, within 18 months of the securities being issued, either Tata Sons must be listed or an arrangement is made to allow SP Group to sell its Tata Sons shares privately at a mutually agreed price.

Bankers said both the fundraising size and the provision requiring SP Group to sell its stake within 18 months, regardless of whether Tata Sons lists, are new additions to the proposal.

The proceeds from the fundraising will be used to repay existing investors in bonds of Goswami Infratech and Capespan Investment worth about 175 billion rupees, along with other debt obligations, according to the term sheet.

Goswami Infratech raised 143 billion rupees through zero-coupon bonds in 2023, selling them to foreign private credit funds at a yield of 18.75%.

The company has extended the maturity of those notes twice, most recently to July 31 from June 30, having earlier pushed it from their original April 30 maturity date.