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.
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