Tata Trusts proposes ₹25,000 crore plan to help SP Group sell part of Tata Sons stake

Tata Trusts Chairman Noel N. Tata has placed a proposal before the Tata Sons board to provide liquidity to the Shapoorji Pallonji (SP) Group by buying back part of its stake in Tata Sons for a minimum gross consideration of ₹25,000 crore.

The proposal, received from the SP Group, was tabled at a Tata Sons board meeting on Thursday. It follows discussions between Noel Tata, Tata Sons Chairman N. Chandrasekaran and SP Group Chairman Shapoor Mistry.

Under the proposed structure, Sterling Investments Corporation Pvt. Ltd. and Cyrus Investments Pvt. Ltd., which hold Tata Sons shares on behalf of the SP Group, would sell enough shares to generate at least ₹25,000 crore.

The buyback would be carried out in two stages over 18 months. Tata Sons would initiate a selective capital reduction process through the National Company Law Tribunal (NCLT), while the shares would be valued using the fair-value methodology prescribed under the Income-tax Rules.

In simple terms, the proposal would allow the SP Group to turn part of its holding in the privately held Tata Sons into cash without requiring a sale of the entire stake.

Noel Tata said several options could be considered to raise the funds needed for the transaction, including using Tata Sons' internal cash flows, selling listed investments, bringing in investors into some of its newer businesses and listing some businesses through an offer for sale.

He also asked the board to take the necessary steps to begin the NCLT process and authorised the operating teams of Tata Sons and Tata Trusts to continue discussions with the SP Group and its bankers.

The proposal comes at a significant time for Tata Sons, after the company's board separately moved towards complying with regulatory requirements for a potential listing. Tata Sons has historically remained privately held, with Tata Trusts holding about 66% and the SP Group about 18.4% of the company.

The SP Group has been seeking ways to monetise part of its Tata Sons holding. Reports earlier this month said the group was looking to raise around ₹25,000 crore by selling part of its stake.

The latest proposal represents a continuation of Tata Trusts' stated effort to find what it described as a "fair and equitable solution" for the SP Group's holding in Tata Sons.