Tata Capital Goes Ahead With Confidential IPO Plan, Targets Market Debut Worth Rs 15,000 Crore: Report

Tata Capital, the financial services subsidiary of Tata Sons, has taken a step toward going public by submitting a confidential pre-filing with the Securities and Exchange Board of India (SEBI), as per sources cited by Moneycontrol.

The pre-filing mechanism, introduced by SEBI in late 2022, allows companies to initiate IPO proceedings without immediately disclosing business-sensitive data in the public domain.

The proposed listing is expected to be among the largest from the Tata stable, with the issue size pegged at approximately Rs 15,000 crore. It will include both fresh issuance of shares and an offer for sale by existing stakeholders, including Tata Sons and the International Finance Corporation (IFC), both likely to lead the dilution exercise.

IPO Structure and Advisor Roster Finalised

According to the report, Tata Capital’s board had already greenlit the IPO on February 25, which includes the issuance of up to 230 million new equity shares. The launch of the IPO will be contingent on prevailing market conditions and regulatory clearances.

In preparation for the listing, Tata Capital has onboarded ten investment banks to manage the offer. The advisory group comprises Kotak Mahindra Capital, Axis Capital, Citi, JP Morgan, ICICI Securities, HSBC Securities, BNP Paribas, SBI Capital, HDFC Bank, and IIFL Capital.

A Fitch Ratings update noted that despite the dilution, Tata Sons is expected to retain a minimum 75 per cent stake in the company post-IPO. As of March 31, 2024, Tata Sons held a 92.83 per cent stake, with the balance split between other Tata Group companies and IFC.

Also Read : Tata Steel Challenges Tax Reassessment Order Of Over Rs 25,000 Crore In Bombay HC

Strong Financial Footing and Business Expansion

Tata Capital operates as a systemically important, non-deposit-taking Core Investment Company registered with the Reserve Bank of India (RBI). It caters to both wholesale and retail finance markets and has steadily expanded its lending portfolio.

Its assets under management reached Rs 158,479 crore by the end of FY24, marking a notable increase from Rs 119,950 crore in FY23 and Rs 94,349 crore in FY22, according to Crisil Ratings.

In addition, Tata Sons has continued to support its financial arm through significant capital infusions, injecting Rs 6,097 crore over the last five financial years. This includes Rs 2,500 crore in FY19, Rs 1,000 crore in FY20, Rs 594 crore in FY23, and Rs 2,003 crore in FY24.

In a separate move to strengthen its capital base, Tata Capital also cleared a Rs 1,504 crore rights issue earlier this year, with Tata Sons expected to fully subscribe.

Joining a Growing List of Pre-Filing Participants

With this filing, Tata Capital joins a cohort of prominent Indian firms that have opted for the confidential IPO route. Others in the list include Tata Play, Oyo, Swiggy, Vishal Mega Mart, Credila Financial Services, Indira IVF, and PhysicsWallah.

The pre-filing mechanism permits companies to file the draft red herring prospectus (DRHP) with SEBI discreetly, enabling them to make internal evaluations based on the regulator’s observations before making any public announcement. If they proceed with the IPO, the DRHP must be made public 21 days before the red herring prospectus is filed. If not, the process can be quietly shelved without market repercussions.

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