Tata Group and Shapoorji Pallonji negotiate share swap to free up Tata Sons stake

The Tata Group is in confidential talks with Shapoorji Pallonji Group, its biggest minority shareholder, about unlocking liquidity tied up in Tata Sons. One option under review would let Shapoorji Pallonji swap its 18.4% stake in Tata Sons for shares of listed Tata entities, including Tata Power. Other possibilities are a outright purchase of the construction firm’s stake financed by foreign banks or a sale to an international investor.

A resolution would ease regulatory scrutiny on Tata’s holding company and help Shapoorji Pallonji meet debt obligations, benefitting creditors such as Cerberus, Davidson Kempner and Farallon. Noel Tata, who chairs Tata Trusts, is leading the effort following Natarajan Chandrasekaran’s announced departure as Tata Sons chairman. Both parties are assessing legal and regulatory implications, with a deal needed within 18 months before the first interest payment on Shapoorji Pallonji’s recent bond issue in July 2028.