₹25k Cr Share Buyback: Why Shapoorji Pallonji Group wants Tata Sons to prioritise proposal at next board meeting

The SP Group is seeking to monetise part of its 18.4% stake in Tata Sons, held through Sterling Investments Corporation and Cyrus Investments, to generate funds for debt repayment, the report said.Tata Sons ₹25,000 crore share buyback detailsThe proposed plan involves a selective reduction of Tata Sons’ share capital over 18 months, which could generate gross proceeds of at least ₹25,000 crore for the SP Group.

The transaction’s valuation would be based on fair value determined under the applicable income-tax rules.The report further revealed that the SP Group has been exploring options to unlock value from its investment in Tata Sons to strengthen its balance sheet and reduce its debt burden. Its stake in the holding company has been pledged against borrowings, making it a potential source of liquidity.In July, the group completed a ₹21,500-crore refinancing exercise and subsequently repaid bonds worth around ₹3,500 crore, easing immediate liquidity pressures.

However, it continues to explore additional funding avenues to meet its debt obligations and improve its financial position.The proposed capital reduction is among the options being considered to monetise the group’s Tata Sons holding. The final transaction structure, valuation and funding mechanism remain subject to further discussions and approvals.The transaction would also need to comply with the legal and regulatory framework governing selective capital reduction.

Unlike a conventional share buyback, a selective capital reduction under Section 66 of the Companies Act, 2013, requires approval from the National Company Law Tribunal (NCLT).RBI rejects Tata Sons registration as NBFCThe proposal comes amid uncertainty over the future ownership structure of Tata Sons, following the Reserve Bank of India’s (RBI) rejection of its application to surrender its registration as an upper-layer non-banking financial company (NBFC), the report said.Under RBI rules, upper-layer NBFCs must list their equity shares on a recognised stock exchange within the stipulated timeline.

The regulatory stance has reignited discussions over whether Tata Sons should continue operating as a privately held entity or move towards a public listing.According to the report, the Shapoorji Pallonji (SP) Group has backed the RBI’s position on listing, with chairman Shapoor Mistry previously advocating a public listing to improve transparency and accountability. However, facing immediate liquidity requirements, the group is also exploring alternative ways to monetise a portion of its stake without waiting for a potential IPO.Meanwhile, Tata Trusts, which collectively own a majority stake in Tata Sons, have opposed a public listing, arguing that retaining the existing ownership structure would help protect the group’s philanthropic activities, which are partly supported by dividends received from Tata companies.Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.