MUMBAI: Shapoorji Pallonji Group is exiting the data centre construction business that it pioneered in the country. SP Group has sold the business to a group of investors including as many as 30 individuals — making it a rare M&A deal — for Rs 700 crore. Typically, in buyout deals, acquirers are limited in numbers.
Individual investors in the business included Ashish Kacholia, Mukul Mahavir Agrawal, Yash Kela and Nikhil Vora.
The business, with a revenue of Rs 400-500 crore and which is profitable, will be spun off from Sterling and Wilson, a subsidiary of SP Group, into a separate entity subject to the lenders’ approval. Sterling and Wilson will use the proceeds from the sale of the data centre construction business to pare its borrowings. SP Group owns 67% of Sterling and Wilson, while chairman Khurshed Daruvala holds the balance 33%.

Apart from the 30 individuals, 12 domestic institutional investors including Alchemy Capital and Capri Global Holdings have also bought into the data centre construction business. The investors have infused the funds in the about-to-be-hived-off business in the form of convertible debentures.

Once lenders approve the restructuring, the debentures will be converted into equity. If the approval doesn’t come, then Sterling and Wilson will have to return the money to investors, said sources.

Though SP intends to exit data centre construction, Khurshed would like to remain in the industry. He plans to bring in Rs 200 crore to the business, which will give him a 22% stake in the unit. In that case, domestic investors’ stake in the new data centre construction entity will be reduced to 78%.