SP Group and Tata Sons have reportedly held fresh discussions to monetise part of SP Group's stake in Tata Sons.
A share-swap proposal involving listed Tata group companies was among the options discussed, but valuation differences remain.
The talks come as SP Group refinances debt backed by its Tata Sons stake, while debate over a potential Tata Sons listing continues.
Tata Sons, SP Group Hold Fresh Talks on Stake Monetisation Amid Valuation Differences
The discussions reportedly included a possible share-swap arrangement, but differences over valuation and deal structure remain unresolved
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Shapoorji Pallonji (SP) Group and Tata Sons have held fresh discussions to explore the monetisation of around a 7% stake in Tata Sons, according to a report by The Economic Times (ET). SP Group currently owns an 18.37% stake in Tata Sons and is looking to sell part of its holding to reduce its estimated ₹60,000 crore debt, the report said.
However, the two sides have not reached an agreement, with differences over both the structure of the transaction and the valuation of Tata Sons remaining unresolved.
Share Swap, Valuation Key Hurdles
One proposal discussed involved a share-swap arrangement, under which SP Group would receive a basket of shares in listed Tata group companies in exchange for a portion of its Tata Sons stake, the publication reported.
The report said Noel Tata, chairman of Tata Trusts, Shapoor Mistry, chairman of SP Group, and N Chandrasekaran, chairman of Tata Sons, participated in an initial round of discussions. Follow-up meetings reportedly included executives from Tata Sons and Tata Trusts, including Farokh Subedar.
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According to ET, Noel Tata favoured a framework that would not require Tata Sons to raise debt to facilitate the transaction. However, SP Group reportedly viewed such an approach as commercially impractical and has continued to prefer a listing of Tata Sons as a more efficient way to unlock value.
Listing Debate Continues Amid Refinancing
The discussions have also revived speculation over a possible Tata Sons listing. While recent Reserve Bank of India (RBI) rules for upper-layer non-banking financial companies (NBFCs) have fuelled expectations that a listing could become possible over time, there is no certainty over whether or when that may happen, the report said.
The combined market capitalisation of the Tata group's 16 listed companies stood at ₹25.28 lakh crore on Thursday. Tata Sons' holdings in these companies are estimated to be worth about ₹11.9 lakh crore, according to ET.
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The publication also reported last week that SP Group secured commitments of around ₹21,500 crore in the first tranche of its refinancing programme. The fundraising, backed by the group's Tata Sons stake, will be used to replace part of its high-cost debt with longer-term financing.
The refinancing terms require SP Group to either secure an announcement of a Tata Sons IPO or reach a stake settlement involving Tata Sons, SP Group and, if required, a third-party buyer within 18 months of the bond issuance.