Shapoorji Pallonji Group Secures Reprieve on Private Credit Debt of $3.4 Billion

Debt Woes Ease for Shapoorji Pallonji Group's Financing Arm

A unit of India's Shapoorji Pallonji Group has secured approval from its major lenders to ease a key debt condition after falling collateral values pushed it closer to its borrowing limits. According to people familiar with the matter, Porteast Investment, the group's financing arm, will temporarily raise its loan-to-value limit to 40% from 34% for four months through July 15. This change allows the company to breathe some life into its debt obligations.

The $3.4 billion loan, raised last May at a steep yield of 19.75%, counts large creditors such as Ares Management Corp., Cerberus Capital Management, Davidson Kempner Capital Management, Farallon Capital Management, and Deutsche Bank AG. The pressure on the group's financing arm follows a decline in the derived value of Tata Sons Pvt. shares pledged as collateral. Tata Sons, the unlisted holding company of the Tata Group, gets much of its value from its stake in Tata Consultancy Services. Shares of TCS have slumped more than 22% so far this year amid a broader selloff in software stocks, driven by concerns around AI disruption and geopolitical uncertainty, dragging down Tata Sons' valuation.

Without a breather, the SP group risked breaching debt covenant just as it needs to refinance about $2.5 billion of rupee-denominated debt at its unit Goswami Infratech Pvt. due on April 30. The unit plans to raise up to $1 billion through its first dollar-bond sale, with the rest to be refinanced through local debt issued simultaneously.

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The episode highlights how sensitive the construction conglomerate's financing is to movements in Tata Sons-linked equity valuations, and more broadly, how jittery credit markets have become in the wake of the Middle East conflict. The Shapoorji Pallonji group, founded more than 160 years ago, operates across engineering and construction, real estate, infrastructure, energy, and industrial projects. The group is controlled by the Mistry family and is best known for building landmarks such as India's central bank and the Al Alam Palace for the Sultan of Oman.