Shapoorji plans asset sales to reduce debt
MUMBAI: Shapoorji Pallonji Group plans to seek about $1 billion by bringing outside investors into its solar unit, as it embarks on a series of asset sales across the 153year-old conglomerate to reduce debt.
The group, owned by reclusive billionaire Pallonji Mistry, would sell as much as 30% in the solar engineering arm of Sterling and Wilson Pvt. Ltd, said Jai Mavani, executive director at the conglomerate’s flagship company. The funds would be raised through a pre-listing stake sale followed by a public offering.
Mint reported on February 8 that the group had put its entire 400 megawatts solar portfolio on the block.
A separate listing of Eureka Forbes Ltd, the water purification unit of publicly traded Forbes and Co. and sales of commercial real estate would also be considered, Mavani said. Part of the proceeds would be used to pare debt, he said.
“We have leveraged ourselves to the level that we believe is sustainable but, beyond a point, we want to create equity for ourselves,” Mavani said in a November 15 interview. “Be it Sterling and Wilson or Eureka Forbes, their real value is a multiple of what’s in the balance sheet.”
The ₹400 billion group, which built the Sultan of Oman’s palace and is now helming one of India’s biggest affordable home projects, plans to tap the market at a time when debt funding is getting scarcer after India’s worst liquidity crunch in two years.
The conglomerate spans engineering and construction, energy and infrastructure, real estate, textiles, financial services and water. Fresh funds will also help the group tap opportunities in the world’s fastest-growing major economy, where the government plans to spend billions on infrastructure and has pledged to provide housing for all by 2022.
Group firms have raised bonds and loans equivalent to at least $4.3 billion since the start of 2014, according to data compiled by Bloomberg.
Mistry has a net worth of $18.4 billion, as per the Bloomberg Billionaires Index. Much of that fortune comes from its holdings in the firm controlling the $100 billion Tata group. His son Cyrus Mistry was chairman of Tata group before being ousted in a boardroom coup in 2016. The solar unit, which provides engineering, procurement and construction services, would generate ₹9,500 crore of revenue for the year ending March 2019, Sterling and Wilson chairman Khurshed Daruvala said. The business was now building its presence in the US and Australia, where the market potential might be about $10 billion for solar contracts, Daruvala said.
Investment talks were underway with overseas multilateral agencies and sovereign funds and pre-IPO placements would probably be completed within six months, Mavani said.