Noel Tata Explores Share Swap With Shapoorji Pallonji For Tata Sons Stake

Representatives of Tata family patriarch Noel Tata and Shapoorji Pallonji Group are discussing a possible share swap as one of several routes to monetise the latter’s 18.4% holding in Tata Sons, as per a report by Bloomberg (BBG).

Under the proposal, SP Group could receive shares in listed Tata companies, including Tata Power, in exchange for part or all of its stake in the privately held holding company, the report said.

The discussions are private and there is no certainty that they will result in a transaction, it added.

A share swap is being considered as a potential route for SP Group to unlock the value of its Tata Sons holding, The Economic Times (ET) had also reported last month.

The discussions have gained greater significance after Tata Sons Chairman N Chandrasekaran announced this month that he would step down in February.

Noel Tata, who chairs Tata Trusts, which collectively own 66% of Tata Sons, is now expected to play a key role in efforts to settle the long-running dispute. He is also married to Aloo Mistry, sister of SP Group Chairman Shapoor Mistry.

Other Options On The Table

According to Bloomberg, two other structures have been discussed. Tata Sons could directly purchase SP Group’s stake, with the transaction financed by overseas banks, or the stake could be sold to an external investor, preferably a global investor.

A key sticking point is likely to be the valuation of Tata Sons, which sits at the centre of the Tata conglomerate and has interests in several large unlisted businesses, including Air India and Tata Electronics, the report said.

The parties are also examining legal and regulatory implications, particularly for a share swap involving listed Tata companies, per Bloomberg.

Advisers are assessing the different structures while SP Group continues to update its stakeholders on the discussions.

Debt Repayment Drives Monetisation Push

SP Group’s efforts to unlock its Tata Sons investment come as the conglomerate looks to manage high-cost debt.

The group completed a large private credit transaction in July, with investors expecting it to eventually monetise the Tata Sons stake, as per BBG.

The potential resolution could benefit investors in SP Group’s debt, including Cerberus Capital Management, Davidson Kempner Capital Management and Farallon Capital Management, the report said.

A resolution is being targeted within the next 18 months, as SP Group’s recently issued bonds require their first interest payment in July 2028, it added.

The bonds, issued through Eqyizen Investment Private, carry an interest rate of 18.95% and have a 36-month maturity, according to the term sheet reviewed by Bloomberg.