SP Group Secures $3.3 Billion in High-Yielding Bond Issue
The Shapoorji Pallonji Group has successfully raised $3.3 billion through a high-yielding debt issue, marking one of the largest private credit fundraises in India this year. The funds will be used to redeem existing non-convertible debentures and to support the group's diverse business ventures.
Bond IssueShapoorji Pallonji GroupHighyielding DebtNonconvertible BondsPrivate CreditReal Estate NewsMay 17, 2025
The three-year non-convertible bonds offered an annual yield of 19.75%, paid at maturity. Deutsche Bank was the sole arranger of the deal. According to sources, the term sheet was signed on May 15, with settlement expected around May 21.
"The borrowing cost is high because this is a structured and risky credit, with limited clarity on the enforceability of the underlying collateral and no cash flows backing it," a debt market investor said. At the time of redemption, this debt will balloon to ₹51,000 crore, given the interest accruing at 19.75% for three years.
The structure includes key creditor protections such as a most-favoured-nation (MFN) clause and a step-up provision. The MFN clause ensures that any future borrowings at a higher coupon require the existing facility to match the higher rate. The step-up provision means any covenant breach would trigger an increase in coupon payments.
The term sheet mandates the monetization of the group's real estate unit within 24 months, targeting around ₹13,000 crore. Similarly, SP Energy could be worth about $800 million, or ₹6,800 crore.
Proceeds from the issuance will be used primarily to redeem non-convertible debentures (NCDs) issued by SP Group's Sterling Investment Corp. Ltd. to Ares and Farallon, totaling around $2.4 billion. The remainder will go toward redeeming a part of Goswami Infratech's NCDs.
Goswami Infratech had raised ₹14,300 crore through an NCD placement in 2023, of which it had repaid ₹7,500 crore through funds raised from Afcons listing and the monetization of port assets like Gopalpur Port and Dharamtar Ports. Around ₹8,800 crore is still outstanding.
Ares, Farallon, Cerberus Capital Management, and Davidson Kempner are likely to subscribe to roughly $400 million each, while Deutsche Bank, the sole arranger for the transaction, could subscribe to about $300 million along with other investors. Other participating investors include Pimco, Sona Asset Management, BlackRock, King Street Capital, Edelweiss Alternatives, RV Capital, and DSP Finance. Edelweiss, BlackRock, and PIMCO could take around $50 million to $100 million each.
In total, the SP Group owns 18.28% of Tata Sons, but this entire stake, split between two holding companies, Sterling and Cyrus, has already been pledged as collateral for two high-interest loans.
An SP Group spokesperson did not respond to requests for comment.
Frequently Asked Questions
What is the total amount raised by SP Group through the bond issue?
SP Group raised $3.34 billion (₹28,500 crore) through the bond issue.
What is the annual yield offered by the non-convertible bonds?
The non-convertible bonds offered an annual yield of 19.75%.
Who were the primary investors in this bond issue?
Ares, Farallon, Cerberus Capital Management, and Davidson Kempner are likely to subscribe to roughly $400 million each, while Deutsche Bank could subscribe to about $300 million.
What will the proceeds from the bond issue be used for?
The proceeds will be used primarily to redeem NCDs issued by SP Group's Sterling Investment Corp. Ltd. to Ares and Farallon, totaling around $2.4 billion. The remainder will go toward redeeming a part of Goswami Infratech's NCDs.
What are the key protections included in the bond structure?
The structure includes a most-favoured-nation (MFN) clause and a step-up provision. The MFN clause ensures that any future borrowings at a higher coupon require the existing facility to match the higher rate. The step-up provision means any covenant breach would trigger an increase in coupon payments.
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