Indian Conglomerate Races to Close $2.7 Billion Debt Deal

Shapoorji Pallonji Group is on track to complete its substantial $2.7 billion fundraising effort by the close of next month. The conglomerate has already secured commitments for more than half of this target amount.

The fundraising strategy involves issuing $950 million in dollar bonds through a designated unit. The remaining portion will be raised via rupee debt managed by Goswami Infratech, a group entity. This dual approach aims to diversify funding sources.

Investors have shown strong interest, committing approximately $1.5 billion across both the rupee and dollar tranches. Notably, foreign banks have secured commitments for the rupee debt, while private credit funds have expressed comfort investing in rupee bonds.

This significant fundraising aims to address the group's existing high debt burden. Shapoorji Pallonji Group, a major shareholder in Tata Sons, has faced challenges in monetizing its stake in the unlisted entity. The current fundraising is expected to refinance existing notes from a June 2023 bond issue.

Deutsche Bank is arranging the dollar bond issuance, which is planned as a private placement with a three-year tenor and a put/call option after the first year. Initial yield guidance for the dollar bonds is set between 14.00%-14.50%. Global asset managers like BlackRock and PIMCO have shown interest in the dollar bond issue.

The fundraising for Goswami Infratech faced some delays, partly due to increased rupee hedging costs, leading to an extension request for a high-yield debt repayment. CareEdge Ratings recently downgraded Goswami Infratech's bonds due to these delays in group-level fundraising.