Tata Trusts chairman Noel Tata has proposed that Tata Sons provide at least ₹25,000 crore in liquidity to the debt-laden Shapoorji Pallonji Group by acquiring part of its stake in the Tata Group’s unlisted holding company.
The proposal was presented at a Tata Sons board meeting on September 17 following discussions between Noel Tata, Tata Sons chairman N Chandrasekaran and SP Group chairman Shapoor Mistry, according to a statement from Tata Trusts.
Under the proposed arrangement, Tata Sons would acquire shares held by Sterling Investments Corporation Private Limited and Cyrus Investments Private Limited, the two Mistry family entities through which the SP Group owns its stake in Tata Sons.
The shares would be acquired at a minimum valuation determined under Rule 11UA of the Income Tax Rules. The transaction is expected to generate gross proceeds of at least ₹25,000 crore for the SP Group.
The proposed deal would be completed in two tranches over 18 months through a selective reduction of Tata Sons’ share capital. The process would require approval from the National Company Law Tribunal.
Noel Tata has suggested that Tata Sons fund the transaction through internal cash flows, the sale of its holdings in listed group companies, external investments in newer businesses and offers for sale during business listings.
He also asked the board to begin the NCLT process and authorised teams from Tata Sons and Tata Trusts to continue discussions with the SP Group and bankers.
The proposal comes after several rounds of talks between the Tata and SP groups on ways to monetise part of the Mistry family’s holding in Tata Sons. Earlier discussions had considered a direct purchase of the stake by Tata Sons or other Tata entities, as well as raising funds through the sale of listed company holdings.
The SP Group’s need for liquidity has grown following its ₹21,500-crore refinancing completed in July. The financing helped address immediate funding requirements but left the group with high borrowing costs.
The refinancing includes a make-whole provision for around 18 months, making early refinancing expensive. The provision is expected to expire around June 2027, after which the group could seek cheaper financing.
The SP Group is looking to reduce its borrowing costs from around 18-19 percent to nearly 12 percent through a future refinancing. Lenders have sought visible progress towards monetising the Tata Sons stake before considering further refinancing or easing loan-to-value requirements.
