Octus on Credit: India’s Shapoorji Pallonji Group readies to launch $3.2B mega private credit deal

Malvika Joshi, India Editor

The biggest private credit offering from India for 2025 is here. 

Shapoorji Pallonji Group is planning to privately place a whopping $3.2 billion equivalent INR-denominated non-convertible debentures or NCDs early next year, with global and domestic private credit investors to primarily refinance NCDs held by Ares and Farallon due in the first half of 2025. 

While the refinancing will push the repayment timelines, the construction-to-real estate conglomerate is unlikely to get significant relief on the refinancing cost. That’s because the unlisted Tata Sons shares being offered as security for the NCDs cannot be sold at present due to restrictions on transfer of shares. 

The outstanding notes held by Ares and Farallon, that the group plans to refinance, offer a 22% yield and are backed by Tata Sons shares as well. Investors are expecting a yield of around 20% on the new NCDs, much higher than the group’s 16% target. 

Shapoorji has displayed its intent to repay through monetization of its construction unit–Afcons Infrastructure, and Gopalpur Port. However, these were easier to monetize as compared to its real estate assets which it plans to include in the security package apart from the Tata Sons shares for the upcoming NCD issue. 

Investors are divided. Some have reposed faith in the promoters’ intent to pay and their ability to keep the refinancing ball rolling. Others are not convinced with the security package being offered and are of the view that repeated refinancing at elevated yields is not sustainable as the assets are being stripped off.

Ares and Farallon are likely to anchor the new issue as well. With several global private credit funds already holding SP Group’s debt, it has yet to be seen if the group is able to raise the targeted amount. 

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