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May 6, 2024

Shapoorji Pallonji Group Seeks $1.2 Billion Loan from Power Finance Corp for Debt Refinancing

The Shapoorji Pallonji (SP) Group is in discussions with Power Finance Corporation (PFC) to secure a loan of up to $1.2 billion to refinance a portion of its Rs 20,000 crore debt set to mature in the final week of May, according to sources reported by Moneycontrol.

These discussions, ongoing for several weeks, involve the SP Group pledging its 18 per cent stake in Tata Sons, the holding company of the Tata Group, as collateral for the initial loan. Corporate filings by the SP Group indicate that the funds were raised through Sterling Investment Corp. Pvt Ltd (SICPL), owned by the Mistry family, which holds slightly over 9 per cent of Tata Sons. Bonds issued in 2021, maturing in 3.5 years, were subscribed by alternative investment manager Ares SSG and hedge fund Farallon Capital.

Power Finance Corporation, established in 1986, initially focused on developing India’s power sector, exclusively lending to state-run entities until 1996. Over the years, it expanded its scope to include private-sector power utilities and projects and recently extended its mandate to lend to non-power sector borrowers.

Last June, a SP Group entity, Goswami Infratech, raised Rs 14,300 crore through rupee-denominated zero-coupon non-convertible debentures (NCDs) from various investors, including Cerberus Capital, Varde Partners, Canyon Capital, Davidson Kempner, and existing lenders Deutsche Bank, Edelweiss Special Opportunities Fund, and Ares SSG. The SP Group was also negotiating with existing lenders to defer a significant portion of the debt to a later date.

On March 26, SP Group announced an agreement with Adani Ports and Special Economic Zone to sell a 95 per cent stake in Gopalpur Port in Odisha for Rs 1,349 crore, fulfilling a crucial clause of its loan agreement regarding the sale of Gopalpur within an agreed timeframe. Adani Ports will acquire 56 per cent from the SP Group and 39 per cent from Orissa Stevedores.

In another move, Afcons Infrastructure Ltd (AIL), the flagship infrastructure engineering and construction company of the Shapoorji Pallonji Group, filed draft papers with markets regulator Sebi in March to raise Rs 7,000 crore through an initial public offering (IPO). The IPO includes a combination of a fresh issue of shares worth Rs 1,250 crore and an offer for sale (OFS) of up to Rs 5,750 crore by promoter Goswami Infratech Private Limited. The offer also includes a reservation for subscriptions by eligible employees, as per the draft red herring prospectus (DRHP).

The Shapoorji Pallonji Group, founded in 1865, is a diversified institution with a significant presence in engineering & construction, infrastructure, real estate, water, energy, and financial services sectors globally. The group’s companies undertake large-scale projects, develop iconic landmarks, and pioneer innovative technologies in water management, renewable energy, oil & gas, and power.

In summary, these strategic moves, including seeking a loan from PFC, selling stakes in Gopalpur Port, and planning an IPO for Afcons Infrastructure Ltd, underscore the SP Group’s efforts to manage its debt obligations while pursuing growth opportunities across various sectors.

Jhumpa Lahiri

Jhumpa Lahiri

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