Tata Trusts stand firm on Tata Sons' private status amid SP Group's IPO push: Report

Tata Trusts holds nearly 66% in Tata Sons, the holding company of the $300 billion Tata Group, while the debt-laden SP Group is the largest individual shareholder with an 18.37% stake

Tata Trusts remains committed to keeping Tata Sons private, two Tata executives told Mint, hours after the Shapoorji Pallonji (SP) Group issued a public statement urging a public share sale of the holding company.

The executives, speaking on the condition of anonymity, said an initial public offering (IPO) would dilute Tata Trusts’ shareholding, reduce its voting rights, and limit its influence over key decisions at Tata Sons. Tata Trusts holds nearly 66% in Tata Sons, the holding company of the $300 billion Tata Group, while the debt-laden SP Group is the largest individual shareholder with an 18.37% stake, reported Mint.

However, Tata Trusts is open to facilitating an exit for the SP Group over a mutually agreed period, provided the interests of the Tata Group are protected, one of the executives told Mint. “We remain open to providing an orderly exit for the SP Group while safeguarding the Tata Group’s interests,” the executive added.

Article 75 of the Tata Sons Articles of Association gives Tata Trusts the right to buy out the SP Group, a provision the latter agreed to when it acquired shares in Tata Sons in 1964, according to Mint.

Tata Sons missed a central bank deadline for an IPO on 30 September, which the SP Group reportedly views as an opportunity to sell its shares and reduce its debt. Currently, the Articles of Association restrict the SP Group from selling Tata Sons shares, Mint reported.

Despite reports of at least one trustee favouring a Tata Sons IPO to aid the SP Group, this does not reflect the official position of Tata Trusts, the executives told Mint. “There is no change of strategy,” said the second executive, dismissing suggestions of a softening stance. The Trusts have instructed Tata Sons to remain private and negotiate an exit for the SP Group.

Tata Trusts is governed by seven trustees, including chairman Noel Tata; TVS Motor Corp. chairman emeritus Venu Srinivasan; retired defence secretary Vijay Singh; Mumbai lawyer Darius Khambata; businessman Mehli Mistry; former Citibank India CEO Pramit Jhaveri; and Pune-based philanthropist and businessman Jehangir H.C. Jehangir, Mint reported.

One executive questioned the timing of the SP Group’s demand, describing the group’s challenges as “self-inflicted” and noting that a Tata Sons IPO would not resolve them, according to Mint.

Senior Supreme Court lawyer H.P. Ranina told Mint that the SP Group’s demand to take Tata Sons public is largely unnecessary. “If SP Group has given an undertaking to the Tatas that they have the right to buy its stake, as upheld by the Supreme Court in 2021, then the merit of this demand is questionable,” he said.

A public listing would require approval from a majority of minority shareholders, limiting Tata Trusts’ decision-making powers if Tata Sons were listed, Mint reported.

On 28 July, Sir Ratan Tata Trusts passed a resolution stating that the chairman of Tata Sons should not alter the company’s unlisted private status and that Tata Sons should fully engage with the Reserve Bank of India on the matter, Mint reported.

Sir Ratan Tata Trust and Sir Dorabji Tata Trust together own over 51% of Tata Sons, with additional stakes held by JRD Tata Trust, Tata Education Trust, Tata Social Welfare Trust, MK Tata Trust, and Sarvajanik Seva Trust. The SP Group owns 18.38%, nine Tata Group companies hold 12.86%, and seven individuals hold the remaining 2.87%, Mint reported.

On Friday, the SP Group issued a rare public statement calling for a public listing of Tata Sons. Aloo Mistry, sister of SP Group chairman Shapoor Mistry, is the wife of Tata Trusts chairman Noel Tata.

“The public listing of Tata Sons is not merely a financial step — it is a moral and social imperative,” the SP Group said in its statement to Mint. The group argued that listing would unlock value for more than 12 million shareholders of listed Tata companies, who are indirect shareholders of Tata Sons.

The statement also referenced the Tata Group’s founder, Jamsetji Tata, suggesting that a listing would uphold the spirit of transparency envisioned by him. The SP Group reiterated its position in light of recent developments and internal differences among Tata Trusts, Mint reported.

The SP Group is pressing for Tata Sons to go public to enable a sale of its stake and meet creditor obligations. While Mint could not independently verify the SP Group’s debt, reports indicate that in May, the group raised $3.3 billion (about Rs 28,500 crore) from private creditors through non-convertible debentures at an interest rate of 19.75%. The SP Group holds 9.185% of its Tata stake and has pledged shares in its privately-held real estate business as collateral for the transaction, according to Mint.