Tata Sons Offers Partial Stake Buyback from SP Group Amid Debt Crisis

Tata Sons, along with its primary stakeholder, Tata Trusts, has reportedly proposed a partial buyback of shares held by the Shapoorji Pallonji (SP) Group, in a bid to ease the latter’s substantial debt load. However, the proposed transaction may necessitate government involvement due to regulatory and financial complexities.

Proposed Deal Structure

According to a report by Moneycontrol, the Tata Group is considering repurchasing 4–5% of the SP Group’s 18.4% stake in Tata Sons. The plan, however, excludes a public listing of Tata Sons, which has long been sought by the SP Group to unlock liquidity.

Several challenges could hinder the deal:

• Capital gains tax implications under current stock buyback regulations.
• Funding limitations, since Tata Sons must raise capital for the transaction without taking on new debt, having surrendered its NBFC licence last year.

SP Group's Debt Burden

The SP Group remains the largest shareholder in Tata Sons after Tata Trusts. It has pledged its entire stake to refinance a mounting debt burden, estimated at ₹60,000 crore, much of which was raised to finance large-scale EPC (Engineering, Procurement and Construction) ventures. The group’s financial stress has worsened post-COVID-19, intensifying its demand for a liquidity event such as a listing of Tata Sons.

Despite pressure, Tata Sons has remained firm on staying privately held.

Tata Trusts Explore Exit Route for SP Group

Earlier this year, Tata Trusts directed Tata Sons Chairman N. Chandrasekaran to open dialogue with the SP Group to evaluate a mutually agreeable exit, potentially avoiding a forced listing. The proposed share buyback is seen as a solution that balances the interests of both sides.

Possible Government Role

Given the size and systemic relevance of the SP Group’s debt, the government is reportedly considering intervening in the negotiations. A major portion of the debt is held by private credit funds, and any default by a prominent industrial house could send shockwaves through the financial system.

Of the ₹60,000 crore in total liabilities, around ₹29,000 crore has already been refinanced at higher interest rates, escalating repayment pressure. An internal assessment has valued Tata Sons at around $70 billion (₹6.21 lakh crore), indicating that a 4–6% stake could be worth ₹25,000 crore, a sum that could significantly alleviate SP Group’s debt.

Regulatory Concessions Under Discussion

Tata Sons and Tata Trusts are expected to approach the government seeking relief on capital gains tax and clarity on debt-related norms. Both entities reportedly agree on providing liquidity support to the SP Group to facilitate a smooth exit.\

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Tata Sons has also given assurances to the Reserve Bank of India (RBI) that it will operate as a debt-free holding company. This assurance followed the group’s decision to surrender its NBFC licence in September 2024. The licence, granted in 2022, came with a condition to list Tata Sons within three years, a deadline that officially lapsed on September 30, 2025.

The group now awaits the RBI’s decision on whether this listing mandate will be relaxed, which could be critical in shaping the next steps.

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