Shapoorji Pallonji Group unit likely to face higher costs in new fundraising, sources say

Shapoorji Pallonji Group (SP Group) could likely ‍be saddled with higher interest rates when its unit Goswami Infratech raises fresh ⁠funds, after another unit was forced to raise interest rates, two sources familiar with the plans said.

Goswami Infratech, the SP Group's real estate and civil engineering company, ‌is planning to ‌raise as much as 250 billion rupees ($2.77 billion) through a two-year zero-coupon bond issue in ‌the coming weeks.

In early discussions, investors demanded returns similar to those offered to investors in Porteast Investment, which sold three-year bonds at a 19.75% interest rate in May, raising 286 billion rupees in India's largest corporate ​bond sale ever.


However, the interest rate climbed ​to 21.75% in December after it failed to meet a covenant ‌linked to ‍a stake sale in another company, the sources said.

"Now ‍that the yield on Porteast Investment's debt has risen, ‌investors are expecting a similar level for Goswami Infratech," one of the sources said.

The sources requested anonymity, as they are not authorised to speak to the media. SP Group did not reply to Reuters query.

Goswami Infratech is now evaluating its options, which could also mean the deal will take longer to close, the ‍source said.

Bankers had been expecting the deal to close in January, with the company meeting investors such as ‍Pacific Investment Management ⁠Co (PIMCO), BlackRock and ⁠Vanguard along with others, Reuters reported last month.

"It seems the issuance may be pushed to March," the second source said.

Goswani Infratech plans to raise funds to refinance its outstanding high-yield notes maturing in April and another loan, as well as for other debt-related and corporate purposes. The new issue will be secured by the SP Group's 9.2% stake in Tata Sons, held via its subsidiary Cyrus Investments.

($1 = 90.1350 Indian rupees)