Noel Tata, Shapoorji Pallonji Explore Share-Swap Deal for Tata Sons Stake

The Tata Group and the Shapoorji Pallonji (SP) Group are discussing several options to unlock the value of SP Group’s 18.4% stake in Tata Sons, with a potential share-swap arrangement emerging as one of the proposals under consideration. The discussions come as the construction conglomerate looks to raise liquidity to address its expensive debt obligations.

Representatives of Noel Tata, chairman of Tata Trusts, are exploring a structure under which SP Group could receive shares in listed Tata companies, potentially including Tata Power, in exchange for some or all of its holding in the privately held Tata Sons. Such an arrangement would allow SP Group to convert its stake in Tata Sons into more liquid listed assets while helping resolve a long-standing ownership issue.

Two other possibilities are also reportedly being examined. Under one option, Tata Sons could directly purchase SP Group’s stake, with the transaction financed through credit facilities from overseas banks. Another possibility would involve selling the stake to an external investor, preferably a global investor. However, discussions remain private and there is no assurance that any of the proposals will result in a completed transaction.

A major challenge in reaching an agreement is expected to be the valuation of Tata Sons. The holding company controls a large part of the Tata conglomerate and has interests in several significant unlisted businesses, including Air India and Tata Electronics. Both sides are also examining the legal and regulatory implications of the different structures, particularly because a share swap could involve listed Tata companies.

For SP Group, monetising the Tata Sons stake could provide important financial relief. The group has significant obligations to creditors and recently completed a large private-credit transaction. Its newly issued bonds are expected to require their first interest payment in July 2028, adding urgency to efforts to generate liquidity.

The discussions have also gained importance following N Chandrasekaran’s decision to step down as Tata Sons chairman in February. Noel Tata, who heads Tata Trusts, which collectively control about 66% of Tata Sons, is expected to play a significant role in efforts to resolve the matter.