November 23, 2024

Tata Capital Plans IPO, Expanding Board and Merging Subsidiaries as It Prepares to Go Public

The Entrepreneur Bytes Team September 19, 2023 299

Tata Capital Ltd is gearing up to go public with an Initial Public Offering (IPO) scheduled for 2025. As part of this transition, the company is expanding its board, merging subsidiaries, and making preparations to comply with RBI regulations for ‘upper-layer’ NBFCs.

Tata Capital Plans IPO, Expanding Board and Merging Subsidiaries as It Prepares to Go Public

Tata Capital Ltd is undergoing significant transformations as it prepares to become a public company with plans for an Initial Public Offering (IPO) in 2025. This strategic shift is part of the Tata Group’s broader vision, and it involves several key changes within Tata Capital’s operations.

To align with its IPO ambitions, Tata Capital has expanded its board and undertaken mergers among its affiliated companies. The IPO process is scheduled to commence in March 2024, with the appointment of investment bankers to facilitate the offering.

The Reserve Bank of India (RBI) has classified Tata Sons as an ‘upper-layer’ Non-Banking Financial Company (NBFC). According to RBI regulations, ‘upper-layer’ NBFCs are mandated to be listed on stock exchanges. Unlisted ‘upper-layer’ NBFCs must complete their listing within three years of receiving this classification. Tata Sons received this NBFC designation in September 2022, and the three-year deadline concludes in September 2025.

To prepare for the IPO, Tata Capital is in the final stages of merging several of its crucial subsidiaries, including Tata Capital Financial Services Ltd, Tata Capital Housing Finance Ltd, Tata Cleantech Capital Ltd, Tata Securities Ltd, Tata Capital Pte. Ltd, Tata Capital Advisors Pte. Ltd, and Tata Capital Plc. The company anticipates RBI’s approval for these mergers by the end of the year.

Tata Capital Financial Services, another Tata entity, has also been classified as an ‘upper-layer’ NBFC by RBI. However, it is not mandated to list separately as it is in the process of merging with Tata Sons.

It’s important to note that Tata Trusts holds a 66% stake in Tata Sons, while the Shapoorji Pallonji Group holds an 18.4% stake. Tata Sons functions as the holding company for the entire Tata Group, encompassing all its subsidiary companies.

Currently, unlisted shares of Tata Capital are trading at ₹425 in the grey market, valuing the company at approximately ₹1.5 trillion. As part of the IPO preparations, Tata Capital’s promoters may reduce their ownership stake by 10-20%, making it one of the largest IPOs ever.

Sources By Agencies

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299 thoughts on “Tata Capital Plans IPO, Expanding Board and Merging Subsidiaries as It Prepares to Go Public”

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