Deutsche may turn collateral damage in Tata mess

BlackRock

28/09/2026 04:51

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.
By Shritama Bose
MUMBAI, Sept 28 (Reuters Breakingviews) - A power struggle at India's Tata group may have another victim in Deutsche Bank. The German lender helped unlisted builder Shapoorji Pallonji group raise pricey debt which it's now trying to offload at a premium. That taps into hopes for an imminent listing of Tata's holding company, Tata Sons. Such an outcome will shore up the ability of SP group, owner of an 18% stake, to honour its borrowings in excess of 541 billion rupees ($5.64 billion). But the timing is less promising than it seems.
The 160-year-old construction group behind Mumbai's iconic Taj Mahal Palace Hotel ran into financial difficulties in 2020, as Covid disrupted cash flows. Its problems intensified through the last six years, pushing the SP group towards higher-cost funding sources.
Deutsche latched onto the lending opportunity as did private credit funds which have been warming up to India. In July, when SP group entities issued bonds worth 214 billion rupees, sole arranger Deutsche scooped up 29% of the offer, according to data from Tracxn. In May 2025, SP group raised 286 billion rupees, roughly $3 billion at current exchange rates, from Ares Management ARES.N, BlackRock BLK.N and others in India's largest ever onshore private credit transaction. Each of those notes is backed by shares in Tata Sons.
Now Deutsche is trying to offload three-year zero-coupon notes issued by Eqyizen Investment, a unit of the SP group, at a ​yield of up to 18.75%, down from 18.95% in July, according to a Reuters report citing unnamed merchant bankers. Yet the spat at Tata group which spilled into public this month muddies, rather than improves, SP's group's ability to honour its borrowings and monetise its Tata Sons holding which might be worth at least 250 billion rupees.
Although Tata Sons' chair, N. Chandrasekaran, supports a listing for the holding company he leads, the move is being forced upon the conglomerate by the Reserve Bank of India. And Noel Tata, chair of the Tata Trusts which owns 65% of Tata Sons, fiercely opposes both a listing and Chandra's leadership position at the holding company.
That could entangle the duo in legal battles and delay any capital markets debut. The power struggle also ought to make SP group's credit and its Tata Sons stake less attractive to investors and lenders because of the sheer official meddling in the Indian conglomerate.
The SP group is already seeking an extension to payments worth 35 billion rupees ($365 million) due on September 30. Until now, it has been able to keep deferring and gorging on increasingly expensive debt to stay afloat. But the struggle at Tata group could make it harder for SP group to refinance. That provides a strong incentive for Deutsche and other lenders to try and monetise their positions.
Follow Shritama Bose on LinkedIn and X.
     
CONTEXT NEWS
Deutsche Bank and other investors are offering rupee-denominated bonds of a Shapoorji Pallonji group firm ​at a premium, encouraged by the construction group's plans to sell part ‌of its stake in Tata Sons, Reuters reported on September 21, citing three unnamed merchant bankers.
The SP group is also planning to seek an extension ⁠to a debt repayment worth around 35 billion rupees, ​which is due on September 30, the report added.
Tata Trusts on September 17 said the SP group proposed to ​sell part of its 18% stake worth 250 billion rupees in Tata Sons, the unlisted holding company of the wider steel-to-IT Tata conglomerate.

(Editing by Una Glani; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on BOSE/shritama.bose@thomsonreuters.com))