Tata Capital files for Rs 15,000 crore IPO with Sebi: Report

Salt-to-software conglomerate Tata Group has initiated the process of launching an initial public offer (IPO) for its flagship financial services arm, Tata Capital, with an estimated value of over Rs 15,000 crore. According to a report by Moneycontrol, Tata Capital, a non-banking financial services firm and subsidiary of Tata Sons, has submitted papers to Sebi through the confidential pre-filing route. 

The Tata Capital board approved an IPO plan on February 25, which will consist of a fresh issue of up to 230 million shares and an offer for sale of equity shares by existing shareholders. The IPO will proceed based on market conditions and regulatory clearances, according to the company.

As of March 31, 2024, Tata Sons held 92.83% of Tata Capital Limited directly, with other Tata Group entities and IFC holding the remaining stake.

It was earlier reported that Tata Capital will finalise and submit the draft papers by the end of March or early April using the confidential pre-filing mechanism. The company has enlisted the services of 10 investment banks, including Kotak Mahindra Capital, Citi, JP Morgan, Axis Capital, ICICI Securities, HSBC Securities, IIFL Capital, BNP Paribas, SBI Capital, and HDFC Bank, for advisory support in preparation for the IPO.

"The draft papers have been filed with the market regulator through the confidential pre-filing route. The issue will be a combination of combination of primary and secondary issue of shares, Tata Sons and investor IFC will pare stake, with greater participation from the former " one of the persons above said.

The decision made by Tata Group is consistent with the RBI's directive for "top-tier" NBFCs to go public within three years of notification, which is set for September 2025. Tata Capital Financial Services, now merged with Tata Capital as of January 2024, is included in the regulatory list.

Furthermore, in June 2024, the Boards of Directors of Tata Motors Limited (TML), Tata Capital Limited (TCL), and Tata Motors Finance Ltd (TMFL) have approved a merger of TMFL with TCL through an NCLT scheme of arrangement. As part of the merger agreement, TCL will issue its equity shares to TMFL shareholders, leading to TML holding a 4.7 percent stake in the combined entity.

On September 16, Bajaj Housing Finance, a company on the RBI's 'upper layer list', had an impressive market debut with its shares hitting the upper circuit, closing at a 135 percent premium over the IPO issue price. Additionally, HDB Financial Services has filed for a Rs 12,500 crore IPO to comply with banking regulations.

Tata Capital Limited is a systemically important Core Investment Company registered with the Reserve Bank of India, and does not accept deposits. The company offers a diverse range of products in both wholesale and retail finance sectors.

As per a recent report by Crisil Ratings in September, Tata Capital Limited had an Assets Under Management (AUM) of Rs 158,479 crore as of March 31, 2024, compared to Rs 119,950 crore in March 31, 2023, and Rs 94,349 crore in March 31, 2022.

The Crisil Ratings report also noted that Tata Sons has invested a total of Rs 6,097 crore in Tata Capital Limited over the past five fiscal years. This includes Rs 2,500 crore in fiscal 2019, Rs 1,000 crore in fiscal 2020, Rs 594 crore in fiscal 2023, and Rs 2,003 crore in fiscal 2024, demonstrating the group's increased focus on the lending business.

This decision makes Tata Capital the eighth major Indian firm to opt for the confidential pre-filing route, following Tata Play, Oyo, Swiggy, Vishal Mega Mart, Credila Financial Services, Indira IVF, and PhysicsWallah.