SP Group Secures $3.3 Billion Through 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 support the group's various business ventures.
Bond IssueShapoorji Pallonji GroupHighyielding DebtCredit FundraiseNonconvertible BondsReal EstateMay 17, 2025
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 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, the 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 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, the sources said, could be worth about $800 million, or ₹6,800 crore.
Proceeds from the issuance will be used primarily to redeem NCDs issued by SP Group's Sterling Investment Corp. Ltd. to Ares and Farallon, which is around $2.4 billion. The remainder will go toward redeeming a part of Goswami Infratech's NCDs. Goswami Infratech had, in 2023, raised ₹14,300 crore through an NCD placement, of which it had repaid ₹7,500 crore through funds raised from Afcons listing and 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 each are likely to subscribe to roughly $400 million, while Deutsche Bank 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.
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 the Shapoorji Pallonji Group through the bond issue?
The Shapoorji Pallonji Group has 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 offer a 19.75% annual yield, paid at maturity.
Which bank arranged the deal for the bond issue?
Deutsche Bank was the sole arranger for the bond issue.
What assets are pledged as collateral for the bond issue?
The collateral includes 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.
How will the proceeds from the bond issue be used?
The proceeds will be used primarily to redeem NCDs issued by SP Group's Sterling Investment Corp. Ltd. to Ares and Farallon, which is around $2.4 billion. The remainder will go toward redeeming a part of Goswami Infratech's NCDs.
Related News Articles
Small Cities, Big Opportunities: How Tier-2 and Tier-3 Cities are Revolutionizing the Real Estate Market
Mid-tier cities like Faridabad, Lucknow, Vrindavan, Ludhiana, Chandigarh, Indore, Dehradun, and Jaipur are becoming hotspots in the real estate market, offering a low-cost, peaceful life and high returns on investment.
PM Modi to Launch Multiple Development Projects in Maharashtra Worth Over Rs 56,000 Crore
Prime Minister Narendra Modi will visit Maharashtra on Saturday to launch several development initiatives costing over Rs 56,000 crore, including the BKC-Aarey JVLR section of Mumbai Metro Line - 3 and various agricultural and animal husbandry projects.
Cornell University: Klarman Fellow Reveals Insights on Housing Costs
A Klarman Fellow at Cornell University has conducted a groundbreaking analysis of housing costs, providing new insights into the factors affecting real estate development and the built environment. This research has significant implications for urban plan
Mumbai Real Estate Projects Halted by New Environmental Clearance Order
The real estate sector in Mumbai is experiencing significant disruptions due to a recent directive from the National Green Tribunal (NGT). This order has led to the suspension of nearly 200 projects in the Mumbai Metropolitan Region (MMR), causing delays
Bhubaneswar: SJTA to Launch Online Platform for Land Settlements
Currently, individuals occupying temple lands submit manual applications to SJTA for property sale or transfer. This process is set to become more efficient with the launch of an online platform.
Mumbai Property Registrations Show Strong Growth in February 2025
Mumbai witnessed a significant rise in property registrations in February 2025, with 12,056 units registered, according to real estate consultant Knight Frank India. This growth indicates a robust market recovery and increased investor confidence in the c