Shapoorji Pallonji Group, Tata Sons' second-largest shareholder, backs IPO

Shapoorji Pallonji Group, the second-largest shareholder in Tata Sons, on Friday backed a potential listing of the holding company of India's sprawling Tata conglomerate, signalling support for a move that could reshape the ownership of one of the country's best-known business groups.

“The Reserve Bank of India has provided full clarity. Tata Sons had been classified as an Upper-Layer NBFC under the RBI’s Scale-Based Regulatory Framework, and the prescribed listing route followed from that regulatory architecture.”

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The RBI rejected Tata Sons’ application to surrender its registration as an upper-layer non-banking financial company and directed it to undertake the necessary compliance, as per SP Group chairman Shapoorji Pallonji Mistry's statement.

Tussle over stake

The decision comes amid discussions between the Tata and Shapoorji Pallonji groups over the latter’s stake in Tata Sons. At a Tata Sons board meeting on Thursday, Tata Trusts chairman Noel Tata tabled a proposal from the SP Group to monetise part of the Tata Sons shares held by its investment companies.

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The SP Group owns about 18.4% of Tata Sons, making it the holding company’s second largest shareholder. The stake is held through Sterling Investments Corporation and Cyrus Investments and has been used as collateral for borrowings. The group completed a Rs 21,500-crore refinancing in July, with investors told that it would monetise part of its Tata Sons stake through a listing or share sale within 18 months. The group also faces a repayment obligation of about Rs 3,500 crore by the end of September.

Under the proposal, the SP Group would sell enough Tata Sons shares held by Sterling Investments Corporation and Cyrus Investments to generate gross proceeds of at least Rs25,000 crore. The proposed transaction would take place in two tranches over 18 months, with Tata Sons initiating a selective capital reduction process through the National Company Law Tribunal. The valuation would be based on income-tax fair value.

The Tata Trusts said potential sources of funding for the transaction could include Tata Sons’ internal cash flows, sale of listed shares, bringing investors into newer businesses and listing some businesses through an offer for sale.

Tata Chemicals Ltd.’s shares fell as much as 8%, the most since June 2024, wiping off Thursday’s 6.5% gain. Tata Investment Corp. declined as much as 5.1%, while Tata Motors Passenger Vehicles Ltd. shed 3.3%.

Opposition to listing

The proposal comes against the Tata Trusts’ longstanding opposition to a Tata Sons listing. The Trusts said on Wednesday that they had not agreed to a listing and that all available options should be examined following the RBI’s communication of September 11.

The Trusts also pointed to a unanimous Tata Sons board decision in March 2024 to remain unlisted and resolutions passed by the Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025 supporting the same position.

Mistry has previously argued that Tata Sons should be publicly listed, saying the move would improve transparency and accountability.

“I have repeatedly said that the public listing of Tata Sons is not merely a financial or regulatory matter. It is a social and moral imperative. It is about strengthening transparency and public accountability in one of India’s most consequential business institutions, while preserving and advancing the extraordinary philanthropic purpose that lies at the heart of the Tata legacy.”

SP-Tata group relationship

The SP Group and Tata group have had a relationship spanning more than a century. Mistry said the latest development should not become a dispute between stakeholders.

“This landmark decision should not be viewed as a victory of one stakeholder over another. It should be viewed as an opportunity to bring people and institutions together.”

He said he wanted to strengthen ties with Tata Sons and the Tata Trusts.

“I therefore look forward not merely to a resolution of the present chapter, but to forging a greater partnership, greater engagement and deeper relationships with Tata Sons and the Tata Trusts in the years ahead. Always with a spirit of mutual respect and always keeping the national interest paramount.”

The Tata Trusts, meanwhile, said their position was based on preserving the existing ownership structure of Tata Sons, under which the majority shareholder is a charitable trust whose dividends fund philanthropic activities.

Mistry said the SP Group was prepared to work with Tata Sons on the way forward.

“From my side, I want to make my views unequivocally clear. I look forward to working closely and constructively with Tata Sons on this pathway. And to forging a deeper, more harmonious, and supportive relationship with the Tata institution.”