Shapoorji Pallonji (SP) Group will use part of its 18.37% stake in Tata Sons to launch a ₹25,500-crore bond issue on Monday, according to a report by the Economic Times. The bond's terms require that within 18 months of issuance, either Tata Sons announces an initial public offering (IPO), or SP Group reaches a settlement with the Tata holding company over its ownership.
"The bond's terms themselves acknowledge that monetisation of the Tata Sons stake is central to repayment," a banking industry official told ET.
Bond Terms and Repayment Conditions
SP Group is likely to pay 18.95% interest on the bond series, which will primarily be used to refinance existing debt, the report added. The issue will be launched on Monday, with settlement likely in the following week. The bonds, which are zero coupon, unlisted and unrated non-convertible debentures (NCDs), will be issued by Eqvizen Investment. Cyrus Investments will pledge Tata Sons shares as collateral.
1 June 2026
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The financing includes a deleveraging covenant requiring repayment of at least ₹13,500 crore within 24 months. Failure to meet this obligation would constitute an event of default, giving investors additional safeguards.
The bond issue is part of SP Group's broader refinancing exercise against its Tata Sons stake, which also includes borrowings raised by Goswami Infratech. The refinancing was originally targeted for completion by end-April, but was delayed to July after market volatility from the US-Iran conflict disrupted execution, prompting the group to seek additional time from creditors as debt maturities approached, the report added.
RBI's New NBFC Classification
Last Wednesday, the Reserve Bank of India implemented a new definition for systemically important non-banking financial companies, called upper-layer NBFCs. The rule brings entities with assets exceeding ₹1 lakh crore under a framework that requires mandatory public listing of shares.
Tata Sons, with an asset base of more than ₹1.75 lakh crore, has been classified as an NBFC-UL under this asset-based framework, which replaced an earlier, more complex metric.
Tata Trusts, the majority owner of Tata Sons, had earlier passed a resolution stating that Tata Sons should remain unlisted. However, vice chairmen Venu Srinivasan and Vijay Singh have since said in public statements that a listing would be a positive outcome. This has reportedly caused discord among trustees, including chairman Noel Tata, who has opposed a listing.
Under the revised NBFC-UL framework, the RBI has clarified that indirect public funds include money received through associates and group entities that themselves have access to public funds. This removes the scope for companies to argue they fall outside the definition of public funds simply because the group companies that invested in them did not borrow debt for that investment.
"RBI had also clarified this issue in FAQs dated April 29 that if a group company has invested in an NBFC and it has access to public funds, then such an NBFC will be considered to have access to public funds," an investor in the existing series of SP Group bonds told ET. This investor said Tata Sons meets this criterion, as group companies with access to public funds have invested in Tata Sons' rights issue.
