Afcons, a unit of the Shapoorji Pallonji group, is in talks with banks for an IPO to monetize assets and fulfil loan commitments, sources said. The company is also considering a strategic sale to Middle Eastern-based firms. These initiatives aim to raise funds and alleviate debt pressure on operating companies within the group. SP Group plans to raise Rs 5,000–6,000 crore through Afcons' monetization. The flagship company, SPCPL, has restructured around $3 billion of debt under a Covid relief scheme. Afcons has executed notable projects like the Ahmedabad Metro and Atal Tunnel. The Mistry family has raised significant debt using Tata Sons shares as collateral.
Afcons, a prominent entity within the esteemed Shapoorji Pallonji group, has initiated dialogues with financial institutions regarding the commencement of an initial public offering (IPO) of its shares. The objective behind this strategic move is to unlock the value of its assets, thereby fulfilling the payment obligations entailed in the loan covenants entered into with the company's financiers, individuals knowledgeable about the stock sale proceedings.
In addition to an IPO, the management is also contemplating a potential strategic sale of Afcons, an engineering, procurement, and construction (EPC) enterprise. To explore this avenue, entities based in the Middle East have been approached. Both avenues are being earnestly explored as means of raising capital that would facilitate the repayment of debts burdening the operational entities within the conglomerate. Such measures would, in turn, alleviate the pressure exerted on the promoter holding companies, which have been diligently seeking financing avenues to honour the loans obtained by the operational companies.
As per insider insights, the SP Group endeavours to secure an impressive sum of Rs 5,000–6,000 crore in the coming six months through the strategic monetization of Afcons. Within the group's business portfolio, the flagship entity, Shapoorji Pallonji and Company Limited (SPCPL), serves as the operational hub for diverse enterprises spanning construction, shipping, and real estate. The Mistry family predominantly backs this entity, further commanding an 18% stake in Tata Sons through investment holding firms. SPCPL presently carries a substantial debt load amounting to approximately $3 billion, which has been subjected to restructuring under the purview of a Covid relief scheme.
It is noteworthy that the State Bank of India (SBI) spearheads the consortium of banks that have extended loans to Afcon. As per the most recent financial statements available for the fiscal year 2022-2023, Afcons reported revenues amounting to Rs 11,269 crore, thereby generating a commendable profit of roughly Rs 356 crore. Back in 2007, the EPC company had contemplated a public offering; however, the group opted to shelve these plans due to the heightened volatility prevalent in the stocks of real estate and construction enterprises.
Afcons has garnered accolades for successfully executing intricate projects in the domain of metro rail and tunnelling, including the prestigious Ahmedabad Metro and the revered Atal Tunnel at Rohtang in Himachal Pradesh. Furthermore, the parent entity, SPCPL, has been actively involved as one of the contractors entrusted with the task of revitalizing government edifices in the national capital under the prestigious Central Vista project. Prime Minister Narendra Modi personally monitors this highly visible initiative.
Based on information obtained from sources and public records, it has come to light that investment holding firms affiliated with the Mistry family have hitherto secured an impressive debt sum of approximately $3 billion from banking institutions and credit funds. These financing arrangements have been facilitated through the provision of Tata Sons shares as valuable collateral.
This story was earlier published by ET Realty
Advertisement
Facebook
Whatsapp
