Article/Intelligence
UPDATE 2: SP Group Targets Upsized, ~$3.2B NCDs To Refi Ares, Farallon; Security Likely To Include Energy, Real Estate Assets Along with Tata Sons Shares
Wed Dec 11, 2024 03:25 AM ET:
Shapoorji Pallonji Group, or SP group, has upsized its planned offering of private, Tata Sons-shares-backed, three-year INR-denominated non-convertible debentures, or NCDs, to around $3.2 billion-equivalent from $2.6 billion, four sources familiar with the matter said.
The Mistry-family-owned, Mumbai-based conglomerate mentioned the upsized target to credit inventors during last week’s pre-deal roadshow in London and Singapore, saying the increased amount would be used to refinance additional debt, said the sources.
Deutsche Bank is the sole arranger for the deal.
Octus reported exclusively on Nov. 27 that SP Group planned to privately place around $2.6 billion-equivalent three-year NCDs to refinance around $2.2 billion private NCDs yielding about 22% and held by Ares Management and Farallon Capital. Those notes, which are due in 1H’25, are also backed by shares in unlisted Indian conglomerate Tata Sons.
For the planned new three-year NCDs – which Octus had reported will likely be anchored also by Ares and Farallon – SP Group is targeting a yield of 16%-17%, said the sources.
However, four credit investors – including two of the original sources familiar – said a more appropriate target would be 19%-20% given that the Tata Sons shares that make up the bulk of the collateral can not be easily monetized because of transfer restrictions. The disposal of those shares requires the approval of Tata Sons’ board, which has opposed previous efforts to do so by the Mistry family as part of a battle between it and the late-Ratan Tata.
Tata Sons is the holdco of Tata Group companies.
SP Group said on the roadshow that it is likely to include some energy and real estate assets as part of the collateral pack for the planned new NCDs, the first two credit investors said.
The outstanding NCDs held by Ares and Farallon were issued by SP Group company Evangelos Venture in 2021 to fund a discounted one-time settlement of bank debt, as reported.
SP Group, through its Goswami Infratech Ltd., had then privately placed $1.7 billion-equivalent NCDs in June 2023 to partly refinance some of NCDs held by Ares and Farallon, as reported. That other tranche is also backed in part by Tata Sons shares.
The Goswami NCDs have recently been partly repaid from two asset sales, as per the terms of those notes, the first four sources said. In total, about 45% of those notes have been repaid, said one of the first two credit investor sources.
The sales include the group’s $645.5 million-equivalent initial public offering of construction and engineering unit Afcons Infrastructure in early November as well as the October disposal of a 56% stake in Gopalpur Port in Odisha to Adani Ports and Special Economic Zone Ltd, said the sources.
SP Group did not immediately respond to requests for comment.
UPDATE 1: Shapoorji Pallonji to Kick Off Roadshows for Planned $2.6-Equivalent NCD Issue in “Few Days” – Media
Tue Dec 03, 2024 03:42 AM ET: Deutsche Bank, the sole bookrunner for Shapoorji Pallonji Group’s planned $2.6 billion-equivalent INR-denominated non-convertible debenture, or NCD, issuance, is planning to commence roadshows with potential investors in Singapore and London in the next few days, ahead of the planned issue, The Economic Times reported on Dec. 2.
Octus had first reported on Nov. 27, citing sources, that the Mumbai-based conglomerate is planning to privately place NCDs in early 2025 to refinance around $2.2 billion debt outstanding against its privately placed NCDs held by Ares Management and Farallon Capital Management.
“The new issuance is expected to carry an 18-23% coupon,” the ET news report states.
The plan to raise debt via issuance of NCDs comes after the state-owned infrastructure financier PFC Ltd. decided not to provide a loan of around INR 150 billion ($1.8 billion) to the group.
Original Story 5:03 a.m. UTC on Nov. 27, 2024
Shapoorji Pallonji Plans to Privately Place ~$2.6B-Equivalent NCDs in Early 2025 To Refi Ares-, Farallon-held notes After PFC Backs Out of INR 150B Loan
Mumbai-based conglomerate Shapoorji Pallonji Group, or SP Group, plans to privately place around $2.6 billion-equivalent INR-denominated non-convertible debentures, or NCDs, in early 2025, after after state-owned infrastructure financier PFC Ltd. backed out of providing a loan of around INR 150 billion ($1.8 billion) to the group, three sources familiar with the matter said.
Proceeds will be used to refinance around $2.2 billion existing privately placed NCDs yielding about 22% and held by Ares Management and Farallon Capital Management, said the sources. SP Group has mandated Deutsche Bank as sole arranger for the new deal, the sources said.
Ares and Farallon Capital Management are likely to anchor the new NCD issue as well, the sources said.
A tenor of around three years is under discussion and the NCDs will be placed with Indian and global private credit funds, the sources said.
The outstanding NCDs held by Ares and Farallon, which are backed by Tata Sons shares, were issued by SP Group company Evangelos Venture in 2021, and were used to fund a one-time settlement of bank debt, according to the sources. Tata Sons is the holdco of Tata Group companies.
The group’s decision to place the $2.6 billion-equivalent new NCDs comes after state-owned infrastructure financier PFC Ltd. backed out of providing a loan of around INR 150 billion ($1.8 billion) to the group, the sources said. That loan would have allowed SP Group to partially refinance the outstanding NCDs held by Ares and Farallon, they added.
During PFC’s earnings call on Nov. 8, Chairman and Managing Director Parminder Chopra said that although PFC had performed a detailed due diligence, its board had decided not to take on “high-end” exposure to SP Group because it is engaged in sectors that are new to the lender. The group was negotiating a two-year loan paying interest of around 12% with PFC, the sources said.
SP Group has been caught in a high-cost debt trap since the Covid-19 pandemic adversely affected its business. The group paid its bank lenders under a one-time debt settlement scheme in April 2022, according to a report from The Economic Times. The payment was made by raising high-cost debt from private credit funds Ares and Farallon in 2021, through multiple tranches, the sources said.
The group has also been monetizing assets to repay debt, as reported.
In October, the group sold its 56% stake in Gopalpur Port in Odisha state to Adani Ports and Special Economic Zone Ltd.
In the same month, Afcons Infrastructure, SP’s construction and engineering unit, raised a total of INR 54.3 billion through an initial public offering, according to Business Today. Proceeds from the IPO were earmarked to service NCDs issued by another SP Group entity, Goswami Infratech Ltd., as reported. Goswami Infratech NCDs, also backed by Tata Sons shares, are held by local and global private credit funds, and high net worth individuals in India, according to sources.
Shapoorji Pallonji, Farallon and Deutsche Bank did not respond to emails requesting comment. Ares declined to comment.