Shapoorji Pallonji seeks $1 bn in debt by pledging Tata Sons shares

MUMBAI : The Shapoorji Pallonji group, the heavily indebted construction empire run by billionaire Pallonji Mistry, has reached out to lenders to raise $1 billion by pledging its shares in the Tata group holding company, according to two people aware of the development. The Shapoorji group is seeking to pledge a part of its 18.4% stake in Tata Sons Ltd, one of the two people cited above said on condition of anonymity.

“The talks are in early stages. They need to infuse a significant dose of capital into their businesses and shares in Tata Sons are the biggest asset that they hold,” the person said.

An external spokesperson for the Shapoorji group declined to comment. Bloomberg had first reported the development on Monday evening.

Shapoorji group’s debt problems surfaced in November, soon after it took group company Sterling & Wilson Solar Ltd public. The Shapoorji group raised 1920.6 crore by selling a part of its stake in an IPO, promising investors that part of the proceeds would be used to clear the loans they had taken from Sterling & Wilson. But the promoters soon sought an extension for repaying the loans, blaming “significant and rapid deterioration in credit markets”.

The group’s latest efforts to raise money comes at a time when capital markets are reeling under severe pressure due to the global covid-19 pandemic and a nationwide lockdown.

The group has put on block its water purifier and vacuum cleaner business Eureka Forbes. It is also seeking to sell certain infrastructure assets across roads, solar power and ports.

Meanwhile, the Tata and Shapoorji groups are engaged in a bitter legal battle since Pallonji Mistry’s son Cyrus was ousted as chairman of Tata group in 2016. Mistry was named the sixth chairman of Tata Sons, taking over the post in 2012 from Ratan Tata.