InvestorQ : Does the selling of Tata Sons stake by the Pallonji group mean that they would be exiting Tata Sons entirely?
Archita Jajjoo made post

Does the selling of Tata Sons stake by the Pallonji group mean that they would be exiting Tata Sons entirely?

Answer
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Rashi Mehra answered.
6 months ago


Firstly, let me clarify that the Pallonji Group is not selling its stake in Tata Sons but only wants to pledge part of the stake to raise funds to overcome the temporary liquidity crunch that the business is facing. The Shapoorji Pallonji Group is in talks to borrow as much as $1 billion (Rs.7500 crore) to repay maturing debt as its cash flows are in a bind due to the lockdown. The lockdown has delayed the plans of the SP group to monetize other assets and that has forced them to look for pledging their stake in Tata Sons to raise the required funds. The SP group currently owns an 18% stake in Tata Sons, which is estimated to be worth $14 billion. However, this move could face a challenge. Tata Sons is closely held and there is hardly any liquidity as it is not listed. The Pallonji group has debt to the tune of Rs.9,020 and was planning to monetize its solar power plants and road assets. However, the lockdown and the economy slowdown has put paid to these hopes. The Tatas may not be too keen in a legal battle over the pledge as it could impact its standing with creditors.