SP Group Weighs Asset Sales Worth Of Billions As An Effort To Inject Cash Into Their Functioning Businesses.

According to persons familiar with the situation, billionaire Shapoor Mistry’s Shapoorji Pallonji Group (SP Group) is considering asset sales, including a majority interest in its flagship engineering business, which could raise around $2 billion. The corporation is expected working with an adviser to find a buyer for its stake in Afcons Infrastructure Ltd., a Mumbai-based infrastructure-building firm. It is anticipated that the Group is also considering selling several ports. For example, Gopalpur Port on India’s east coast might be among the properties SP Group is trying to sell.

The discussions are in their early stages, and SP Group may decide to maintain the assets for a longer period, according to the sources. SP Group did not immediately respond to a request for comment.

SP Group, founded in 1865, constructed luxury hotels, stadiums, palaces, and industries throughout Asia, notably the Reserve Bank of India building and the iconic Tower Wing of the great Mumbai Taj Mahal Palace Hotel. According to their website, Afcons specialises in engineering and construction, including maritime infrastructure, tunnels, bridges, and roads. The SP Group has projects in 25+ countries expanding its reach in Asia, Africa, and Middle Eastern countries.

The loss incurred by the SP group.

Last year, the Mistry family lost two vital members in three months. Pallonji Mistry, the first name behind the business empire and Shapoor’s father, died in late June at 93. Shapoor’s younger brother, Cyrus Mistry, was killed in an auto crash in early September. The majority of the family’s $29 billion fortune stems from an 18% shareholding in Tata Sons Ltd., the primary holding company of India’s multifaceted conglomerate Tata Group. But, their Tata Sons holding, which accounts for around 90% of the family’s riches, is embroiled in a bitter conflict with Tata Group.

As loan rates rise, Shapoor Mistry has been looking for methods to free up cash. Following the sales, the business returned its lenders $1.5 billion and exited a debt recast programme.

SP Group sold the following also.

• Water purification equipment producer Eureka Forbes Ltd. to Advent International for 44 billion rupees ($536 million) last year.
• Sterling and Wilson Renewable Energy Ltd. were sold to the business kingdom Reliance Industries Ltd. 
• SP Group is in discussions to raise $1.75 billion by giving the remaining half of its ownership to Tata Sons.

According to certain sources, the corporation intends to utilise the funds to settle liabilities and inject capital into functioning companies. The consortium has already pledged nearly 9% of its 18.37% share in Tata Sons. With this recent deal, the whole share, which is now valued at around 94,000 crores, would be committed to lenders such as two international banks and many offshore hedge and credit firms. The zero-coupon payment-in-kind loan will be raised by a firm named Cyrus Investment Pvt Ltd. This family firm of Mistry will be repaid at the end of the maturity period, which is projected to be three years.

According to a second source, the total value of the loans obtained by Mistry family-held firms against Tata Sons shares would now reach $3 billion. The group has already obtained around $1.6 billion from various lenders from 2021 onwards, with repayments totalling $750 million due by the end of the current fiscal year.

The group has appointed their long-term relationship banks to syndicate the loan.

• Standard Chartered Bank (SCB).
• Deutsche Bank (DB).

The other lenders who are in discussions and willing to participate in the transaction are the following.

• Foreign hedge funds Cerberus Capital Management.
• Ares SSG.
• Oaktree Capital.
• Davidson Kempner Capital Management. 
• Ontario Municipal Employees Retirement System. 

All these entities gave no responses to the queries asked.

Disclosure.

Recently, the firm has formed parallel structures for its real estate and infrastructure operations inside its current holding companies to boost operating cash flows. The firm had tight links with the Tata Group, but relations deteriorated after the late Cyrus Mistry was dethroned as chairman of Tata Sons in 2016. The two parties engaged in a long litigation struggle, which ended in favour of the Tata Group. Let’s see whether these efforts of selling assets worth millions will help the SP kingdom to grow in these competitive times!