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 bond issue, one of the largest private credit fundraises in India this year. The funds will be used to redeem existing non-convertible debentures and other financial obligations.

Bond IssueShapoorji Pallonji GroupHighyielding DebtPrivate CreditNonconvertible BondsReal EstateMay 17, 2025

SP Group Secures $3.3 Billion in High-Yielding Bond Issue

Real Estate:Mumbai: The Shapoorji Pallonji Group (SP Group) has successfully closed a $3.34 billion (₹28,500 crore) high-yielding debt issue, marking one of the largest private credit fundraises in India this year, according to sources. The three-year non-convertible bonds offer an annual yield of 19.75%, paid at maturity, with Deutsche Bank acting as the banker for the deal. The term sheet was signed on May 15, with settlement expected around May 21. The borrowing is secured against the group's 9.2% stake in Tata Sons held via Sterling Investment, all shares in its real estate company, Shapoorji Pallonji Real Estate, and its oil and gas business, SP Energy. The high borrowing cost reflects the structured and risky nature of the credit, with limited clarity on the enforceability of the underlying collateral and no cash flows backing it. At the time of redemption, this debt will balloon to Rs 51,000 crore, given the interest accruing at 19.75% over 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 rate will require the existing facility to match the higher rate. The step-up provision means any covenant breach will 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 is estimated to be worth about $800 million, or ₹6,800 crore. Proceeds from the issuance will be primarily used to redeem non-convertible debentures (NCDs) issued by SP Group's Sterling Investment Corp. Ltd. to Ares and Farallon, which totals around $2.4 billion. The remainder will go toward redeeming a part of Goswami Infratech's NCDs. Goswami Infratech had raised Rs 14,300 crore through an NCD placement in 2023, of which it has 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 remains outstanding. Ares, Farallon, Cerberus Capital Management, and Davidson Kempner are each likely to subscribe to roughly $400 million, 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. The successful bond issue underscores the SP Group's strategic financial planning and its ability to attract significant investment despite the high-risk nature of the credit. It also highlights the ongoing importance of structured financing in the Indian market, especially for large corporate groups like the SP Group.

Frequently Asked Questions

What is the total amount raised by SP Group through the bond issue? A: SP Group has raised $3.34 billion (₹28,500 crore) through the bond issue. Q: What is the annual yield offered by the non-convertible bonds? A: The non-convertible bonds offer an annual yield of 19.75%, paid at maturity. Q: Which assets are the bonds secured against? A: The bonds are secured against the group's 9.2% stake in Tata Sons held via Sterling Investment, all shares in its real estate company, Shapoorji Pallonji Real Estate, and its oil and gas business, SP Energy. Q: What are the key creditor protections included in the bond structure? A: The bond structure includes a most-favoured-nation (MFN) clause and a step-up provision to protect creditors. Q: How will the proceeds from the bond issue be used? A: The proceeds will be primarily used to redeem NCDs issued by SP Group's Sterling Investment Corp. Ltd. to Ares and Farallon, and to redeem a part of Goswami Infratech's NCDs.

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