Shapoorji gets RBI waiver averting higher yield on private debt

Mumbai, Aug 20

India's private credit market is on track to expand in size and scale after the Shapoorji Group successfully raised $3.4 billion through the country's biggest ever such deal.

Earlier in May the infrastructure conglomerate scooped up the deal predominantly from global funds including Areas, Cerberus and Davidson Kempner opening up the local market to the world.

Back home domestic firms including Motilal Oswal, InCred Capital, Avendus are tapping new opportunities to lend to companies that are otherwise constrained to access traditional banking routes to raise money.

Shapoorji Pallonji Group has secured a key regulatory waiver from the banking regulator, according to sources familiar with the development.

Sterling Investment Corp received a three-year extension from the Reserve Bank of India to meet the capital adequacy norms, the people said.

A delay in securing the waiver could have raised the interest rate and triggered a default, according to the terms of the deal reviewed by Bloomberg.

Shapoorji Pallonji Group has secured a key regulatory waiver from the banking regulator, easing pressure on its landmark $3.4 billion private credit deal and averting an increase in the cost of that borrowing, according to people familiar with the matter.

Sterling Investment Corp, the group’s non-banking finance unit, last week received a three-year extension from the Reserve Bank of India to meet the capital adequacy norms, the people said, asking not to be identified as the details are private. The extension gives the unit more time to comply with rules on the minimum cash buffers required for India’s shadow lenders.

Lenders required Sterling Investment — which pledged a 9.2 per cent stake in Tata Sons as collateral for India’s largest-ever private credit deal — to obtain the waiver by the end of September, or inject 60 billion rupees in fresh capital, according to terms of the deal reviewed by Bloomberg.

A delay in securing the waiver could have raised the interest rate about 200 basis points above its current 19.75 per cent, the people said. It could have also triggered a default if 50.1 per cent of bondholders had demanded it, the terms show.

EoM.