$6B Exposure Threatens Collapse as Asset Sales and Tata Sons Shares Hang in Balance

THE SHAPOORJI PALLONJI (SP) GROUP, one of India's oldest conglomerates, is teetering on the edge of a financial abyss as it grapples with a staggering nearly $6 billion debt exposure, fuelled by a series of high-yield private credit deals and relentless asset disposals.

- By Palak Shah

The latest chapter in this saga - a $3.4 billion, three-year, zero-coupon rupee bond with a jaw-dropping 19.75 per cent annual yield - marks India's largest private credit deal, but it's not the lifeline it seems. Behind the headlines, industry insiders reveal a grim reality: this is the fourth rollover of a debt facility that's ballooned to $6 billion in total exposure, with the Reserve Bank of India (RBI) reportedly greenlighting the gamble against SP's 18.37 per cent stake in Tata Sons and its sprawling property portfolio. The SP Group is estimated to have a total debt of between Rs 55,000 crore and Rs 60,000 crore. This debt is roughly split evenly between the Mistry family (promoters) and the group's operating real estate and construction businesses. As the group sells assets to service crushing interest payments, a burning question looms: what happens when there's nothing left to sell?

A Debt Spiral Fuelled by Desperation

The SP Group, led by billionaire Shapoor Mistry, has been battling liquidity woes since the Covid-19 pandemic exacerbated its debt burden, which peaked at Rs 45,000 crore ($5.4 billion) in March 2020. Fast forward to 2025, and the group's consolidated external debt stands at Rs 20,000 crore ($2.4 billion), down from Rs 37,000 crore in 2020, thanks to aggressive asset sales. But the relief is fleeting. The latest $3.4 billion bond, arranged by Deutsche Bank and backed by global heavyweights like Ares Management, Cerberus Capital, and Davidson Kempner, is a zero-coupon deal - meaning no interest is paid until maturity in 2028, when the principal and accrued interest will hit like a financial tsunami.