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Tata Sons weighs 18.4% stake swap with Shapoorji Pallonji
Livemint··28 Aug
Tata Group is in talks with Shapoorji Pallonji Group, its biggest minority shareholder, on a share swap for SP's 18.4% stake in Tata Sons. Noel Tata's representatives are exploring giving SP shares of listed firms like Tata Power for the stake. Other options include a Tata Sons buyout funded by overseas banks or a sale to an outside investor.
Prism
What It Means For You
- A resolution would decide who holds influence over Tata Sons' unlisted arms, including Air India and iPhone maker Tata Electronics.
- Investors in Shapoorji Pallonji Group's bonds, including funds like Cerberus and Farallon, stand to gain if the stake sale unlocks cash to repay debt.
- Any listed-share swap would need regulatory clearance, since it involves stock in publicly traded Tata companies.
What's Happening
- Noel Tata is chairman of Tata Trusts, the charities that hold 66% of Tata Sons, and is married to Aloo Mistry, sister of SP Group chairman Shapoor Mistry.
- Natarajan Chandrasekaran's plan to step down as Tata Sons chairman in February has put Noel Tata in the lead role for a settlement.
- SP Group closed one of India's largest private credit deals in July as it seeks to monetise its Tata Sons stake.
The Tata-Mistry Ownership Puzzle
- SP Group's bonds, issued through Eqyizen Investment, carry an 18.95% coupon and mature in 36 months, with the first interest payment due in July 2028.
- A resolution needs to happen within 18 months, the timeline before SP Group's bond issue requires its first payout.
- The Economic Times reported last month that a share swap was one option under discussion for SP Group to monetise its Tata Sons stake.
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