India's SP Group arm taps dollar debt to meet another unit's dues

MUMBAI: Mercur Finance, a subsidiary of India's Shapoorji Pallonji Group, is issuing $125 million in U.S. dollar bonds to fulfill a payment obligation, according to three sources familiar with the matter. The company is reopening its zero-coupon dollar bonds, which were due for redemption in July 2029, with the option to redeem them after one year.

The real estate conglomerate intends to utilize the funds raised to invest in rupee-denominated bonds issued by a local group entity. Another reissuance of the bonds is planned. The sources were not authorized to speak to the media and declined to be identified. Shapoorji Pallonji Group did not provide a response to a Reuters inquiry for comment.

Eqyizen Investment, another SP group subsidiary, is set to reissue zero-coupon rupee-denominated bonds with a maturity date in July 2029. This firm had raised 213.50 billion rupees through the initial issue at an 18.95% yield in July. The funds generated from this dollar-rupee fundraising deal will be earmarked to address a payment obligation of Porteast Investment, another SP group subsidiary, which is due to pay around 35 billion rupees for debt raised in May 2025.

The group has requested an extension for the deadline, which is now set for October 31. One of the sources explained that this current arrangement is a scaled-down version of the July deal, as the scale is considerably smaller. In July, Mercury Finance raised $650 million, which was subsequently invested in rupee debt sold by Eqyizen Investment.

These bonds are backed by SP Group's stake in Tata Sons, held through Cyrus Investments. The financial outlook for SP Group's debt has improved following Tata Trusts, Tata Sons' majority shareholder, announcing in early September that SP Group had proposed selling 250 billion rupees worth of its stake.