Shapoorji Pallonji Group plans to sell assets worth $1 billion: Report

A construction worker walks past a hoarding of Indian conglomerate Shapoorji Pallonji Group on the outskirts of Mumbai

The Shapoorji Pallonji Group plans to raise $1 billion by selling stake in its solar power unit to investors. The 153-year old conglomerate plans to cut its debt through a series of asset sales, Bloomberg reported.

The group will sell as much as 30 percent stake in the solar engineering arm of group company Sterling & Wilson. The funds would be raised through a pre-listing stake sale, followed by a public offering, Jai Mavani, Executive Director of the group, was quoted as saying.

The pre-IPO placement may be completed in the next six months. The company is in discussion with multilateral agencies and sovereign funds for investment, Mavani told the news agency.

Mavani said there will be a separate listing of the water purification unit of Forbes & Co, Eureka Forbes. The company is also considering selling real estate and parts of these proceeds will help it pare debt.

The Pallonji Mistry-owned group has come to the market at a time when debt funding is scarce in India because of a liquidity crisis.

"We have leveraged ourselves to the level that we believe is sustainable but, beyond a point, we want to create equity for ourselves. Be it Sterling & Wilson or Eureka Forbes, their real value is a multiple of what’s in the balance sheet," Mavani was quoted as saying.

Khurshed Daruvala, Chairman of Sterling & Wilson, said revenue from its solar unit for the year ending March 2019 will be Rs 9,500 crore (approximately $1.3 billion).

The company is building its presence in US and Australia, where the solar contracts market may be valued at $10 billion, Daruvala said.

Shapoorji Pallonji is engaged in engineering, construction, energy and infrastructure, real estate, textiles and financial services. India, which is deemed as the fastest growing economy in the world, is a promising market for the company as the government has earmarked a lot of funds for infrastructure and has promised housing for all by 2022.

According to Bloomberg data, the group's companies have raised $4.3 billion since 2014 by issuing bonds and borrowing from banks. Pallonji Mistry's net worth is $18.4 billion.

Mavani said he is optimistic that Eureka Forbes will be valued at more than its parent Forbes, which has a market capitalisation of Rs 2,610 crore.

The company is looking to sell some of its real estate. It recently sold a technology park in Pune and is on the last leg of the sale of its Chennai IT park.

Mavani said the group aims to raise Rs 3,000 crore by March 2019 through asset sales and infusions from the founder family.