Pallonji raises $200mn against Tata Sons shares: Report

Shapoorji Pallonji (SP) Group has raised $200 million (Rs 1,400 crore) against its stake in Tata Sons to buy time for the liquidity-starved construction empire and raise short-term funds, according to a report by The Economic Times.

The fund, provided by Deutsche Bank, was given to Sterling Investments and Cyrus Investments, which belong to the Mistry family, against the ownership of Tata Sons shares. The group owns 18% stake in Tata Sons through the two entities.

According to the report, this short-term finance is part of a larger fundraising exercise by the group to deal with its liquidity problem. The Deutsche Bank funding is a temporary solution to meet immediate needs ahead of the asset sales, people aware of the development told the publication.

The group requires about Rs 5,000-6,000 crore to give them the flexibility to undertake group-wide M&As and divestments in order to restructure the balance sheet, as per the report.
To deal with this situation, the Mistrys have been in talks with various funds including KKR, banks such as Standard Chartered and non-bank finance companies (NBFCs) like Edelweiss, among others, to raise funds, the publication reported quoting sources.

"Multiple discussions are ongoing," one of the persons directly involved with the development told the newspaper. "They are looking at different deals, structuring with different sets of investors—asset-based, project-level funding, holding company infusion that gives them options to use the money whichever way they want… This was an urgent requirement, so Deutsche Bank stepped in," the person said.

The documentation for the financing is said to have been finalised at the end of December.

The Mistrys and Tata Sons have been engaged in a legal battle over the ouster of Cyrus Mistry as the Tata Group Chairman in October 2016.

On December 18, the National Company Law Appellate Tribunal (NCLAT) had reinstated Cyrus Mistry in Tata Sons. However, the Supreme Court on January 10 stayed the NCLAT order in its entirety.