Shapoorji Pallonji (SP) Group has initiated a fundraising campaign worth Rs 22,000 crore ($2.6 billion), despite Tata Group’s objections. The group plans to raise funds from both domestic and international sources, using its 18.2% stake in Tata Sons as collateral. Tata Group has responded, asserting that Tata Sons shares are not transferable and cannot be used as collateral without following the provisions in the company’s articles of association.
Shapoorji Pallonji’s Fundraising Plan
According to media reports, the SP Group intends to raise funds from alternative asset managers and private lenders. The funds are intended to refinance maturing loans and reduce borrowing costs. The group’s efforts to negotiate with Power Finance Corporation (PFC) for 10 months failed, leading to this new move. Deutsche Bank is leading the fundraising effort, organizing roadshows in Singapore and London to attract investors.
Sterling Investments (SIPL), a unit of the SP Group, previously raised $2.6 billion from Ares SSG and Farallon Capital. This move follows a similar fundraising effort earlier this year by another SP Group unit, Cyrus Investments (CIPL), which raised Rs 14,300 crore by selling a 9.18% stake in Tata Sons.
Allegations of Misrepresentation
Shapoorji Pallonji’s move has raised serious concerns. Experts allege that the group is misrepresenting the status of Tata Sons shares to raise money from global investors. They argue that the SP Group is using misleading information, claiming Tata Sons shares are freely transferable in case of default, which is not true. Tata Group has strongly opposed these claims, asserting that its shares are not transferable without adherence to strict company regulations.
Tata Trust CEO Siddharth Sharma made it clear that Tata Sons’ stance on share transfers remains firm and that the group is using Tata shares to raise funds deceptively.
Despite challenges, the SP Group has worked to strengthen its financial position through asset sales and public listings, including a successful IPO for Afcons Infrastructure. The group’s long-standing history, dating back to its founding in 1865 by Pallonji Mistry, continues to shape its operations in diverse sectors such as real estate, construction, and energy.
Shapoorji Pallonji’s recent fundraising campaign has sparked significant controversy, with the Tata Group vehemently denying any claims of share transferability.
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