By Saikat Das and Deepika Lalwani
India’s Shapoorji Pallonji Group plans to refinance ₹25,500 crore ($2.7 billion) with the sale of local-currency bonds, which will help restore confidence among investors after months of uncertainty over the group’s ability to refinance impending debt maturities.
Farallon Capital Management, one of the group’s subsidiaries, will issue rupee-denominated bonds worth about ₹15,000 crore to a group of investors including Davidson Kempner Capital and Cerberus Capital Management, said the people, who asked not to be identified as the information is private. The funds will be used to refinance debt at the unit of Goswami Infratech Pvt. Ltd.
Separately, the group raised $650 million on Friday through three-year dollar bonds at a yield of 14.5 percent, others said.
Deutsche Bank AG, the sole arranger for both legs of the offering, could invest about $400 million, making it one of the largest investors, the people said.
The fund raise comes after Goswami extended the maturity period of the loan twice and provides much-needed liquidity to the infrastructure real estate group. It also eases concerns about its ability to refinance near-term debt after months of negotiations with creditors. Investors are also keeping an eye on the group’s 18.4 percent stake in Tata Sons Pvt, as delays in unlocking value from that holding have complicated its refinancing efforts.
“The successful closing of the Shapoorji deal will mark another milestone for India’s private credit market, boosting investor confidence,” said Ajay Mangalunia, executive director, Capri Global Capital Management. “Some local funds are showing interest in the deal because of some visibility on Tata Sons.”
Delays in refinancing had earlier tested investors’ patience, with some holders offering Goswami’s non-convertible debentures in the secondary market at par prices of about 90 per cent. Although no trading was reported at those levels, some offers were at par last week following progress on the refinancing, according to people familiar with the matter.
The most recently reported secondary market trade occurred on June 16, when Goswami’s NCDs worth about ₹200 crore changed hands at ₹165.33 per share, according to the National Stock Exchange of India, which publishes historical data on secondary debt market trading.
Rivals BSE Ltd and NSE only display completed trades, with the latter being the more commonly used platform. Offers to buy and sell that have not yet resulted in a trade are often shared privately.
SP Group’s three-year zero-coupon rupee bond will be priced at 18.95 per cent, according to the people. Existing investors will get a slight discount, taking their effective yield to around 19.05 per cent. The bond also includes a greenshoe option.
The borrowing is backed by shares of group firms Afcons Infrastructure Ltd and Tata Sons, in which SP Group holds 18.4 percent, the people said. The loan agreement also requires the company to repay Rs 135 billion within 24 months.
SP Group and Farallon Capital did not immediately respond to emails seeking comment. Deutsche Bank, Cerberus, Davidson Kempner declined to comment.