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Tata Capital Ltd. is preparing for its market debut, having filed updated draft papers for a mandatory listing. The IPO plans to augment its Tier-I capital base, supporting future lending and business expansion. This move signals a significant step for the financial services arm of the Tata Group, promising potential opportunities for investors.
Tata Capital Ltd., a prominent non-banking financial company (NBFC) under the Tata Group, is advancing towards its initial public offering (IPO) with the recent filing of updated draft papers for a mandatory listing. This move comes more than a month after receiving the green light from the Indian market regulator, marking a significant milestone for the company's growth trajectory.
The IPO will involve Tata Sons Pvt. selling up to 23 crore shares, while International Finance Corp. (IFC) plans to offload approximately 3.58 crore shares. Additionally, the company intends to issue up to 21 crore shares through a fresh issue. Currently, Tata Sons holds an 88.6% stake in the NBFC on a fully diluted basis, with other Tata group companies owning an additional 7%. IFC possesses 7.16 crore shares, representing a 1.8% stake in the firm.
A key objective of this IPO is to strengthen TATA Capital Unlisted Shares’s Tier-I capital base. The proceeds from the fresh issue will be strategically utilized to meet future capital requirements, including onward lending activities, which are expected to arise from the company's expanding business operations. Furthermore, a portion of the funds raised will be allocated to cover offer-related expenses, ensuring a smooth and efficient IPO process.
Kotak Mahindra Capital Co., Axis Capital Ltd., BNP Paribas, Citigroup Global Markets India Pvt., and HDFC Bank Ltd. have been appointed as the book-running lead managers for the issue. Tata Capital has confirmed that there will be no pre-IPO placement ahead of its market debut, ensuring fair access to the offering for all potential investors.
In preparation for the IPO, Tata Capital's board recently approved fundraising through a rights issue, aiming to raise up to Rs 1,752 crore, along with plans to raise up to Rs 30,000 crore via bonds. Prior to this, the company successfully raised Rs 1,500 crore through a rights issue in late February, with Tata Sons subscribing to its entire entitlement and IFC also participating. These strategic financial maneuvers are designed to bolster the company's lending capacity and improve its leverage ratios.
The company has stated that it does not require firm arrangements of finance through verifiable means towards at least 75% of the stated means of finance, excluding the amount to be raised from the fresh issue and existing identifiable accruals, as per SEBI regulations. This highlights the financial stability and well-planned approach of the company towards its capital needs.
With the listing, TATA Capital Unlisted Shares will become the 17th Tata Group company to be publicly traded, further solidifying the group's presence in the financial markets. For the fiscal year 2025, the company reported a profit of Rs 3,655 crore, a notable increase from Rs 3,327 crore in the previous fiscal year. Additionally, its revenue surged to Rs 28,313 crore from Rs 18,175 crore, reflecting strong financial performance and growth.
Tata Capital's journey to its IPO reflects its strategic focus on strengthening its financial foundation and capitalizing on growth opportunities in the financial services sector. The IPO is expected to not only provide the company with the necessary capital to expand its lending operations but also enhance its visibility and credibility in the market. This move is anticipated to attract a wide range of investors, further fueling the company's growth and solidifying its position as a key player in the Tata Group's portfolio. As TATA Capital Unlisted Shares prepares for its market debut, stakeholders and potential investors are watching closely, anticipating positive outcomes and sustained growth in the years to come.
