Shapoorji Group Secures $3.35 Billion in Largest Private Credit Deal Led by Deutsche Bank

Deutsche Bank has orchestrated the largest private credit transaction outside the United States by raising $3.35 billion for the Shapoorji Pallonji (SP) Group. The infrastructure conglomerate leveraged a portion of its Tata Sons stake as collateral, attracting commitments from major global investors, including BlackRock and Morgan Stanley, according to a report by The Economic Times.

The financing was secured through three-year non-convertible debentures (NCDs) offering a 19.75 per cent yield, compounded annually and payable at maturity. This marks a rise from earlier debt issuances, which commanded yields approximately one percentage point lower. In 2023, SP Group’s Goswami Infratech had raised $1.7 billion at an 18.75 per cent yield, the news report said.

Deutsche Bank committed $893 million to the bond issuance and is expected to retain over $500 million on its books. The German bank syndicated the deal to a wide range of global investors, including BlackRock, Sona Capital, Morgan Stanley, and PIMCO. Notably, this transaction marked the first significant private credit trade in India for firms like Sona Capital and PIMCO.

The $3.35 billion funding round brought together three distinct investor groups: existing bondholders of Sterling bonds, current investors in Goswami bonds, and a new cohort of private credit investors from the US, the UK, Hong Kong, Singapore, and India.

Deutsche Bank spread its exposure across international credit funds, with BlackRock acquiring $70 million, Sona Capital investing $180 million, Morgan Stanley Investment Management putting in $60 million, and PIMCO contributing $45 million. This consortium totalled around $355 million, complemented by a separate $500 million investment from Ares Capital.

Farallon Capital, a longstanding creditor to the SP Group, invested $596 million (approximately ₹5,100 crore). Other key participants included Davidson Kempner and Cerberus Capital, committing $401 million and $474 million respectively.

The debt is secured against SP Group’s 9.2 per cent shareholding in Tata Sons, held through Sterling Investment, as well as assets in Shapoorji Pallonji Real Estate and SP Energy — the group’s oil and gas business. This issuance, exclusively arranged by Deutsche Bank, represents the first large-scale corporate bond placement following changes in Foreign Portfolio Investor (FPI) norms, which now permit offshore investment under the general limit route instead of the more restrictive Voluntary Retention Route (VRR), the news report said.

Originally aiming for a March close, the transaction was completed six weeks later, delayed by geopolitical uncertainties. While part of the proceeds will refinance existing debt and support growth in SP Group’s real estate and engineering, procurement, and construction (EPC) businesses, the deal is expected to transform capital access for large Indian conglomerates, the news report said.