Daijiworld Media Network – New Delhi

New Delhi, Aug 28: The Tata Group and its largest minority shareholder, the Shapoorji Pallonji (SP) Group, are exploring options to unlock liquidity from the latter’s 18.4 per cent stake in Tata Sons, according to people familiar with the discussions.

The talks come as the SP Group seeks funds to repay high-cost debt. One proposal under consideration involves SP Group receiving shares in listed Tata companies, such as Tata Power, in exchange for some or all of its stake in privately held Tata Sons.

The discussions are being held privately and no final agreement has been reached so far.

Besides the proposed share swap, two other options have reportedly been discussed. These include Tata Sons directly buying the SP Group’s stake with financing from overseas banks, or the stake being sold to an external investor, preferably a global investor.

A resolution to the long-standing differences between the Tata and SP groups could provide significant relief to investors in SP Group debt, including global investment firms such as Cerberus Capital Management, Davidson Kempner Capital Management and Farallon Capital Management.

For the Tata Group, settling the issue could also help ease regulatory pressure surrounding Tata Sons. The Reserve Bank of India’s regulations have renewed pressure on the holding company to list on stock exchanges.

Tata Trusts, headed by Noel Tata, holds around 66 per cent of Tata Sons. Noel Tata's role has gained added significance following N Chandrasekaran's announcement that he will step down as Tata Sons chairman in February.

Noel Tata also has a family connection with the SP Group, as he is married to Aloo Mistry, sister of SP Group Chairman Shapoor Mistry.

Representatives of Tata Sons and the Shapoorji Pallonji Group did not immediately comment on the reported discussions.