Shapoorji Pallonji Group is an Indian conglomerate company that is probably to raise $1.6 billion through a private credit facility. There are reports and discussions going on in the industry that the Group may pledge a few of its shares in Tata Sons. The company is in talks with several private equity firms and hedge funds, and a deal is expected to be finalized in the coming weeks, says a report.
For the unaware, Shapoorji Pallonji Group is taking the initiative to repay its debt and also invest in the latest projects. The talks are being led by Deutsche Bank AG and Standard Chartered Plc, says a report. The credit facility is to get funds for the company for a period of three years and a double-digit interest rate.
The successful completion of the private credit facility would have a significant influence on the Shapoorji Pallonji Group. It would allow the company to regain its financial position. Also, it will help the company grow its businesses and also send a positive sign to creditors and investors, thus helping the company to get more capital in the long run.
But the company is likely to have some risks related to the private credit facility. As the group would be taking additional debt, this is likely to put the company at financial risk. Also, the group would be lending some of its control to its lenders, which is also not a good sign. Thus, the group has to carefully consider both the pros and cons of taking the help of a credit facility.
The Shapoorji Pallonji Group is a diversified conglomerate with interests in construction, engineering, real estate, and power. The group is controlled by the Mistry family, which is one of the richest families in India. In recent years, the group has been facing a lot of financial troubles. One cannot forget the tragic incidents that the Pallonji family has been facing since 2022 when the same year saw the deaths of the father-son duo of Pallonji Shapoorji Mistry and Cyrus Pallonji Mistry.
In 2022, the Shapoorji Pallonji Group sold water purifier equipment maker Eureka Forbes Ltd. to Advent International and also divested Sterling and Wilson Renewable Energy Ltd. to Reliance Industries Ltd. After the sales deals were done, the group repaid $1.5 billion to lenders. In 2018, the group was forced to sell its stake in Tata Sons, the holding company of the Tata Group, after a long-running dispute with the Tata family.
The group has also been hit by rising interest rates and a slowdown in the Indian economy.
The talks for the private credit facility are still ongoing and it is not yet clear whether they will be successful. Deutsche Bank and Ontario Municipal were contacted by the media company Bloomberg but neither financial institution commented. Also, other banks and investors show no sign of responding to the matter of the SP group.