Shapoor Mistry eyes ₹25,000 crore in two years for part of SP's Tata stake

Mumbai: Shapoor Mistry, chairman of Shapoorji Pallonji (SP) Group, has sought around ₹25,000 crore from Tata Sons over the next 24 months for part of the stake held in the principal holding company of Tata group, people familiar with the matter said. SP Group owns an estimated 18.37% of the unlisted Tata Sons and has been exploring ways to monetise about 7% of its holding.

Mistry has written to Tata Trusts chairman Noel Tata with the proposal, the people said. It's expected to be discussed by Tata Sons executives as the two sides seek a resolution to the matter, they added. The SP Group chairman had been discussing monetising part of the stake with Tata Sons chairman N Chandrasekaran and Noel Tata until July, executives aware of the matter said. In early August, Chandrasekaran announced that he would not seek reappointment when his term ends in February 2027, and has not participated in subsequent discussions, they said.

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Immediate Fund Requirement

The talks have made limited progress because of differences over the structure and valuation of a potential transaction. Tata Trusts holds a controlling stake in Tata Sons.

Shapoor Mistry and Noel Tata did not comment.

Mistry's proposal could allow SP Group to raise cash against part of its stake, while allowing Tata Sons to retain its private company status, which Noel Tata has been keen to preserve, according to the people.

One proposal discussed by the two sides involved a share swap. SP Group would receive shares in a basket of listed Tata companies in return for part of its stake, officials said. The latest buyback proposal would provide SP Group with cash proceeds over a defined period, while potentially avoiding a listing of Tata Sons. The valuation, funding mechanism, quantum and timing of any buyback have yet to be agreed, the people said. An executive close to the matter said discussions had taken place between Mistry and Tata, but no agreement had been reached. Incidentally, Noel Tata is married to Shapoor Mistry's sister.

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"While SP Group has favoured a listing, it needs immediate funds to meet its debt requirements," said the person cited above. "If RBI mandates listing, it may still take a while. And SP Group needs to monetise some stake to meet its needs. How much stake will be monetised will depend on the valuations." Recent Reserve Bank of India rules relating to upper-layer non-banking finance companies have renewed speculation about a potential listing of Tata Sons. But it remains unclear whether such a listing will happen in the near term.

The discussions come as SP Group faces pressure from lenders following a Rs 21,500 crore refinancing round completed in July. This addressed its immediate funding needs but left the group with relatively expensive debt, people familiar with the matter said. The group's borrowing costs are currently 18-19%, which it's seeking to lower to 12% through a future refinancing. The July raise, however, includes a make-whole provision for about 18 months, making early refinancing costly. The term is expected to expire sometime close to June 2027. SP Group has repayments of around ₹3,500 crore due by the end of September, and lenders want to see tangible progress in monetising the Tata Sons stake before considering further refinancing or further relaxation of loan-to-value requirements, the people said.

Failure to make the September payment could potentially be treated as a default. The obligation relates to an earlier financing arrangement and was expected to be met from proceeds of the July funding.