SP Group Raises $650 Million In Debut Dollar Bond Issue At 14.5% Yield

The Shapoorji Pallonji Group has completed a $650-million dollar bond issue through its group company Mercury Finance, marking the dollar tranche of a delayed dual-currency fundraising programme. The three-year securities were issued at a yield of 14.50% and carry an option for redemption after one year.

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The fundraising is part of a broader refinancing plan that also includes a separate rupee bond issue by Eqyizen Investment, another group company.

Rupee Bond Issue Forms Second Part Of Fundraising

Eqyizen Investment is seeking to raise funds through three-year zero-coupon rupee bonds carrying a yield of 18.95%, according to a term sheet. The bonds are secured against the group’s stake in Tata Sons, held through subsidiary Cyrus Investments.

The debt-raising plan has faced multiple delays since the beginning of the year amid uncertainty surrounding the potential monetisation of SP Group’s holding in unlisted Tata Sons. The group is a significant shareholder in Tata Sons.

Under the revised structure, Tata Sons must either be listed within 18 months of the securities being issued or an arrangement must be made to enable SP Group to sell its Tata Sons shares privately at a mutually agreed price.

The proceeds from the fundraising are expected to be used largely to refinance existing borrowings. The high yield on the securities reflects the financing structure of the transaction and the group’s refinancing requirements.

Global Investors Participate In Dollar Debt Sale

BlackRock, the world’s largest asset manager, subscribed to the dollar bonds, while Deutsche Bank acted as the sole arranger and was also among the major investors, as per reports.

Other investors included AllianceBernstein, Goldman Sachs Asset Management and U.S.-based hedge fund Centiva Capital.

The dollar issue adds to the group’s recent efforts to raise funds from international and private credit investors. The SP Group has previously relied on structured debt instruments to refinance its obligations.

In June 2023, group company Goswami Infratech raised ₹14,300 crore through zero-coupon bonds sold to foreign private credit funds at a yield of 18.75%. The maturity of those notes has since been extended twice, most recently to July 31 from June 30. The total repayment, including interest, is estimated at around ₹14,500 crore.

The latest $650-million fundraising, along with the proposed rupee bond issue, marks another step in the group’s refinancing process. The structure of the transaction remains linked to the future treatment of the group’s Tata Sons holding, which forms a key part of the security and broader debt-repayment plan.