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Shapoorji Pallonji (SP) Group has opened subscriptions for its first US dollar-denominated bond issue, seeking to raise USD 650 million as part of a broader INR 25,500 crore fundraising programme aimed primarily at refinancing existing debt. The three-year bond, issued through Mercury Finance, follows multiple delays linked to uncertainty surrounding the group's investment in Tata Sons. Market sources said easing hedging costs after measures introduced by the Reserve Bank of India to encourage foreign currency inflows helped revive the transaction. The fundraising programme also includes a separate zero-coupon bond issuance through another group entity.
Shapoorji Pallonji (SP) Group has opened subscriptions for its inaugural US dollar-denominated bond issue, seeking to raise USD 650 million through group company Mercury Finance as part of a larger INR 25,500 crore fundraising programme focused primarily on refinancing existing debt, according to sources familiar with the matter.
The three-year bond issue was launched in the past week after facing multiple postponements since the beginning of the year. Sources said the delays were largely attributed to uncertainty over the group's ability to monetise its investment in the unlisted Tata Sons, where Shapoorji Pallonji Group remains one of the largest shareholders.
According to the sources, recent reductions in foreign exchange hedging costs, following measures introduced by the Reserve Bank of India to encourage US dollar inflows, improved market conditions and enabled the transaction to proceed.
Mercury Finance is offering the three-year securities with a yield of 14.50%. The bonds also include a provision allowing the issuer to redeem the securities after one year. The sources requested anonymity as they were not authorised to discuss the transaction publicly.
SP Group did not respond to Reuters' request for comment on the bond issue.
Sources also said Deutsche Bank is acting as the sole arranger for the issuance and has underwritten a portion of the offering. BlackRock is expected to participate as an investor, although neither organisation officially confirmed its involvement. Deutsche Bank declined to comment, while BlackRock did not respond to Reuters' request for confirmation.
The dollar bond forms part of SP Group's wider capital-raising exercise. Alongside the foreign currency issuance, another group entity, Eqyizen Investment, is expected to issue three-year zero-coupon bonds to raise the remaining amount. Reuters had reported in the previous week that the zero-coupon securities would carry a yield of 18.95%.
Reuters had also reported earlier this year that BlackRock was considering investing between USD 100 million and USD 200 million in the proposed dollar bond through one of its Asia-focused investment funds.
The latest fundraising follows an earlier debt transaction completed by another SP Group entity, Goswami Infratech, which raised INR 14,300 crore through zero-coupon bonds in 2023 by placing the securities with foreign private credit funds at a yield of 18.75%. The maturity of those notes has since been extended twice, with the latest extension moving the repayment deadline to July 31 from June 30.
The proceeds from the current fundraising programme are expected to be used largely to refinance existing borrowings as the group continues to optimise its debt profile.
Source - Reuters
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