A hint of exiting Tata Sons is making SP Group hopeful as it goes into bond market again

SP Group company Goswami Infratech Pvt. Ltd is looking to raise ₹20,000-25,000 crore by selling three-year high-yield bonds to refinance an earlier loan. According to one of the two people cited above, bankers led by Deutsche Bank are pitching investors a coupon of 15-16%, sharply lower than initial expectations of around 19.75%, betting on a “positive development" involving Tata Sons.

“The pitch was simple," said one of the people. “With the changes in the Trustees' group, they are expecting that either Noel Tata will manage to convince everyone for a listing of Tata Sons. Or probably, they'll give an exit to Shapoorji Pallonji by buying back the stake or bringing in some other investor."

In such a case, the pricing could be 15.75-16%, and the tenure of the bond issue could also be reduced to 18-24 months; however, if there are no developments signalling an exit for SP Group in the next few months, the pricing will be 19.75%, the person added.

A Deutsche Bank spokesperson declined to comment. Emails sent to the Shapoorji Pallonji Group, Tata Sons and Tata Trusts remained unanswered.

While Tata Trusts remains opposed to the SP Group's demand for an initial public offering (IPO), which would let it raise money by selling some of its 18.38% stake, the group is banking on the ascent of Noel Tata as chair of Tata Trusts, and a potential exit from Tata Sons. Mint reported on 24 September that Tata Trusts has directed Tata Sons chair Chandrasekaran to continue discussions with the SP Group to provide an exit route. The Trusts also asked Chandrasekaran to explore all possible options to ensure that Tata Sons remains private.

The person cited above said Deutsche Bank met about 40-45 overseas investors as part of its first set of roadshows and is expected to bring in new investors like private credit funds. At the roadshows, it pitched the idea that Noel Tata’s presence at the helm of Tata Trusts– the 65.9% shareholder of Tata Sons–could pave the way for clarity on SP Group’s long-delayed monetization of its stake, the person said. The amount raised will refinance Goswami Infratech's ₹14,300-crore bond maturing on 30 April 2026, which it had issued at a coupon of 18.75% in 2023.

The SP Group’s last fundraise was done at a very high cost because of the timing and not its fundamental credit weakness, said Prakash Agarwal, a partner at Gefion Capital. "Secondary yields later dropped to nearly 16%, reflecting the market’s view that eventual monetization of the Tata Sons stake, whether through a buyback or listing, will comfortably cover the debt. The immediate fundraising requirement is largely to refinance earlier maturities, and the only real uncertainty is the timing of liquidity. With that clarity, pricing on the new high-yield bond should be significantly more competitive compared to the previous issuance," Agarwal added.

A third person aware of the discussions at Tata Trusts said the trustees have unanimously decided to let Tata Sons chairman Chandrasekaran negotiate with the SP Group on a possible exit. “Once that is done, Chandra has to come to Tata Trusts to convince them," said the third person.

A Reserve Bank of India (RBI) order mandated large non-bank financiers, including Tata Sons, to get listed by 30 September, a deadline that has crossed. The third person cited above said that listing the holding company of the $300 billion conglomerate will be a strenuous exercise.

On 10 October, the SP Group repeated its call for a public listing. “The public listing of Tata Sons is not merely a financial step — it is a moral and social imperative," it said. It would unlock significant value for over 12 million shareholders of listed Tata companies, who are indirect shareholders of Tata Sons, it said.

Market participants tracking the deal say the possibility, however remote, of Tata Sons eventually listing, or agreeing to a structured buyout of SP Group’s stake, is already influencing sentiment.

“Price compression will happen only if there is a positive development," the person cited earlier said. “But bankers believe that Noel Tata is in a position now to push that conversation forward."

SP Group, which has faced repeated stress cycles over the past few years, has relied heavily on refinancing, asset sales, and private credit markets to meet its obligations. It has sold Eureka Forbes, the Gopalpur Port in Odisha and several real estate assets to repay bondholders. However, the group still owes substantial debt to bondholders as the bonds are set to mature next year in April.