Tata Group, SP Group In Talks On Share Swap To Unlock Tata Sons Stake

Tata Group is in talks with its largest minority shareholder, Shapoorji Pallonji (SP) Group, on ways to unlock the value of its 18.4% stake in privately held Tata Sons, according to people familiar with the matter.

One proposal under discussion involves SP Group receiving shares in listed Tata companies, such as Tata Power, in exchange for some or all of its holding in Tata Sons, the people said. The talks remain private and could still change.

Representatives of Noel Tata, the Tata family patriarch, are involved in discussions around the possible structures, according to the people familiar.

Two other options are also on the table. Tata Sons could directly buy SP Group’s stake, with financing from overseas banks. The other option would involve selling the stake to an outside investor, preferably a global investor.

Representatives of Tata Sons and SP Group did not immediately comment.

Tata Sons Stake Deal And Valuation

A key issue in any transaction will be the valuation of Tata Sons. The holding company controls a large part of the Tata conglomerate and owns stakes in several businesses, including unlisted companies such as Air India and Tata Electronics.

The two sides are also looking at the legal and regulatory issues linked to the options under discussion. A share swap involving listed Tata companies could require additional regulatory review.

SP Group has been looking for ways to raise funds against its Tata Sons holding as it works to deal with its debt burden. The group recently completed one of India’s largest private credit transactions in July.

A successful deal could give SP Group access to liquidity while allowing Tata Sons to address its long-running ownership issue.

RBI Rules Add Pressure On Tata Sons

The talks come as Tata Sons continues to face pressure linked to regulatory rules for large non-banking financial companies.

Tata Sons has remained privately held despite earlier expectations around a possible listing. The company approached the Reserve Bank of India in 2024 seeking de-registration after becoming debt-free, a move that could allow it to remain private.

A settlement with SP Group could also help address the ownership structure as regulatory attention on Tata Sons continues.

Noel Tata is chairman of Tata Trusts, which owns about 66% of Tata Sons. His position has gained importance after Natarajan Chandrasekaran announced this month that he will step down as Tata Sons chairman in February.

Noel also has a family connection with the SP Group. He is married to Aloo Mistry, sister of SP Group chairman Shapoor Mistry.

SP Group Faces Debt Repayment Timeline

SP Group’s recent financing adds a time factor to the talks. Bonds sold through Eqyizen Investment Private offered an interest rate of 18.95% and have a 36-month maturity.

The first interest payment is due in July 2028, according to the bond term sheet.

People familiar with the matter said a resolution needs to emerge within the next 18 months. There is no certainty that the talks will result in a deal, and the final structure could change as negotiations continue.

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