Shapoorji Pallonji Group (SP Group), the single-largest stakeholder in Tata Sons, intends to raise funds to repay part of its debt and infuse cash in its operating companies, through various means such as pledging of shares. The group intends to raise about $1.7 billion, and this time Tata Group is unlikely to raise objections.

It intends to raise part of the funding by pledging shares it holds in Tata Sons, the holding company of all Tata Group firms. At present, Shapoorji Pallonji and Company (SPCPL), the holding company of SP Group, which holds an 18.37% stake in Tata Sons, has a debt of about ₹20,000 crore.

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In 2020, Tatas had objected to pledging of the shares and had even moved the Supreme Court seeking to restrain the Mistry Group from raising capital against it by direct or indirect pledging of shares. The apex court, in its order, had stated that the issue had to be sorted out between the parties. Later, when the SP Group pledged nearly half of its shares in Tata Sons, the Tatas did not object.

If this could be termed as precedence, industry sources believe the deck is clear for SP Group to pledge shares to raise funds.

“The funds would be raised in the short-term period and the group is in talks with a couple of financial institutions. The intention is to reduce debt and infuse cash in operating companies. This would be repaid from operating profits and monetisation of assets as and when required. The idea is to bring down debt to appropriate levels over time,” a source close to the development said.

“Further, monetisation of certain assets by way of stake sales would also be looked at. Two years ago, SPCPL had a debt of ₹37,000 crore, which was brought down to the present levels through various initiatives,” he said.

SP Group officials refused to comment on the fund-raising plans.

The group had earlier pledged close to 9% of its 18.37% stake in Tata Sons.

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Earlier in April 2022, SP Group exited a One-Time-Resolution (OTR) plan by paying ₹12,450 crore to lenders by selling assets, that included monetisation of Sterling Wilson Renewable Energy and Eureka Forbes. The group had raised ₹3,750 crore through monetisation, while the Mistry family infused ₹5,100 crore in SPCPL and the balance were raised from internal accruals of the group.

In April 2021, KV Kamath Committee approved the group’s OTR package after its businesses were hit by the Covid-19 pandemic. As part of the OTR, the group had agreed to sell assets and repay the debt by March 31, 2022.

In October 2021, the Group had raised ₹2,845 crore by selling a 40% stake in group firm Sterling & Wilson Solar (SWSL) to Reliance New Energy Solar, a wholly-owned subsidiary of Mukesh Ambani-controlled Reliance Industries. In September 2021, SP Group sold a majority stake in its consumer durables business under the Eureka Forbes label to US-based private equity fund Advent International for ₹4,400-crore.

SP Group had used the proceeds from these sales to pare debt.