Tata Capital's ₹15,000cr mega IPO imminent: What we know
What's the story
Tata Group has selected 10 investment banks to handle the upcoming initial public offering (IPO) of its financial services arm, Tata Capital, Moneycontrol reports.
The banks chosen include Kotak Mahindra Capital, Citi, JP Morgan, Axis Capital, ICICI Securities and HSBC Securities.
Other players in this major deal are IIFL Capital, BNP Paribas, SBI Capital and HDFC Bank.
Tata Sons owns majority stake (92.83%) in Tata Capital as of March 31, 2024. Balance stake is held by other Tata Group entities.
Timeline
IPO filing expected by end of March
Tata Capital is expected to file its draft IPO papers by the end of March or early April. It may take the confidential pre-filing route.
The IPO is expected to be a combination of primary and secondary share issues, with Tata Sons and investor IFC possibly trimming their stakes.
However, Tata Sons refused to comment on the matter.
Approval
Tata Capital's IPO plan approved by board
Tata Capital's board approved the IPO plan on February 25. It includes a fresh issue of up to 230 million shares and an offer for sale of equity shares by existing shareholders.
The company has said that the IPO is subject to market conditions and regulatory clearances.
Before launching its IPO, Tata Capital's board also sanctioned a rights issue to raise ₹1,504 crore.
Strategy
Confidential pre-filing route: A strategic move
The confidential pre-filing route, which Securities and Exchange Board of India (SEBI) introduced as an alternative for main board issuers in November 2022, enables firms to keep sensitive business details or financial metrics and risks confidential.
This strategy gives issuers the comfort of confidentiality until a final decision on listing is taken.
Tata Capital's decision to take this route aligns with similar moves by other major Indian companies like Tata Play, Oyo, Swiggy, Vishal Mega Mart, Indira IVF, and PhysicsWallah.
Compliance
Tata Capital's IPO in line with RBI's listing requirement
The move to list Tata Capital comes in line with Reserve Bank of India (RBI)'s mandate for "upper layer" NBFCs to list within three years of being notified.
Tata Capital Financial Services, which merged with Tata Capital in January 2024, features on this regulatory list.
This requirement has also led other firms like Bajaj Housing Finance and HDB Financial Services to file for substantial IPOs.