Now Reading: SP Group record bond tied to Tata Sons IPO lures rich investors
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SP Group record bond tied to Tata Sons IPO lures rich investors
SP Group record bond tied to Tata Sons IPO lures rich investors
Private wealth managers are selling pieces of Shapoorji Pallonji Group's record ₹21,350 crore unrated, unlisted bond to high-net-worth individuals, ultra-HNIs and family offices. The debt is backed by the group's stake in…
The Story in Brief
Private wealth managers are selling pieces of Shapoorji Pallonji Group's record ₹21,350 crore unrated, unlisted bond to high-net-worth individuals, ultra-HNIs and family offices. The debt is backed by the group's stake in Tata Sons, offering investors a future payoff tied to a potential IPO of the holding company. The three-year zero-coupon bonds yield around 19 per cent but carry significant risks.
Tata Sons is not assured to list, and its shares are not freely transferable. The Reserve Bank of India recently retained Tata Sons in its upper-layer NBFC list, doing little to clarify its IPO timeline. Industry experts warn that default risks remain high.
The Indian Opinion
The 19 per cent yield on the SP Group bond may blind wealthy investors to the risks. The debt is unrated, unlisted, and the underlying Tata Sons shares are not freely transferable. The group's repeated asset sales to meet obligations should give pause. The narrative that this is a safe bet on a Tata Sons IPO is one-sided. Tata Trusts has not endorsed the collateral, and RBI has kept Tata Sons on the upper-layer list. The real test will be RBI's decision on Tata Sons' de-registration application. If denied, the IPO exit route vanishes.
Source: livemint.com
This story was synthesised by AI from the source linked above.
