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March 21, 2024

Shapoorji Pallonji Group Pursues $2.4 Billion from Lenders for Debt Refinancing

The Shapoorji Pallonji Group, under the stewardship of Indian tycoon Shapoor Mistry, is embarking on a significant financial maneuver, seeking up to $2.4 billion from various lenders. According to insiders familiar with the matter, the conglomerate is engaged in discussions with multiple stakeholders, including state-run Power Finance Corp, to secure funds totaling around Rs 20,000 crore.

Reports suggest that negotiations are underway, with Power Finance being approached for a substantial portion of the planned funding, potentially up to Rs 15,000 crore. However, it’s worth noting that the specifics of the lending arrangement remain subject to change as discussions progress.

In addition to engaging with Power Finance Corp, the Shapoorji Pallonji Group is also exploring interest from prominent financial entities such as Davidson Kempner Capital Management and Cerberus Capital Management LP.

The intended utilization of the raised capital primarily revolves around debt refinancing, particularly concerning obligations incurred approximately three years ago by the group’s main investment vehicle, Sterling Investment Corp. This debt was collateralized against shares in Tata Sons, the holding company of India’s esteemed conglomerate, the Tata Group. Sterling Investment Corp currently holds a notable 9.1 percent stake in Tata Sons, as disclosed by a note from rating agency CareEdge.

Despite outreach attempts by Bloomberg News, the Shapoorji Pallonji Group refrained from offering immediate comments regarding their fundraising endeavors. Similarly, Davidson Kempner chose to stay silent on the matter, while Cerberus and Power Finance have yet to respond to requests for comment.

It’s speculated that the funding mechanism might involve a privately placed rupee-denominated bond. Such an approach could provide flexibility and potentially favorable terms for the group as it navigates its debt restructuring strategy.

In the context of India’s financial landscape, this move by the Shapoorji Pallonji Group underscores the intricate dynamics at play within the realm of corporate finance. The conglomerate’s proactive stance in seeking substantial funding reflects a strategic approach to managing its financial obligations and optimizing its capital structure.

As the negotiations progress and details unfold, market observers will be keenly watching the developments surrounding this significant fundraising initiative. The outcome of these efforts could have far-reaching implications not only for the Shapoorji Pallonji Group but also for the broader financial ecosystem within which it operates.

Jhumpa Lahiri

Jhumpa Lahiri

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