The Board of Directors of Tata Capital Ltd (TCL) is set to convene on Tuesday to discuss a proposal for raising funds through the issuance of equity shares on a rights basis, in line with plans for an initial public offering (IPO).
This development comes as TCL and its parent company, Tata Sons Pvt Ltd, are required to list their equity shares on the exchanges as per the Reserve Bank of India’s October 2021 scale-based regulation (SBR) for non-banking finance companies (NBFCs) in the upper layer (UL).
TCL functions as a non-deposit taking NBFC-investment credit company (NBFC-ICC), while Tata Sons is categorized as a core investment company. Tata Sons has been seeking to deregister itself as an NBFC to avoid mandatory listing.
Under the October 2021 SBR, NBFCs in the upper layer are mandated to list within three years of being identified as NBFC-UL. The regulation also stipulates that disclosure requirements must align with those applicable to a listed company even before the actual listing, as per the Board-approved policy of the NBFC.
Last month, TCL informed the exchanges that its Board of Directors had approved alterations to the Memorandum of Association of the Company and the adoption of a new set of Articles of Association to conform with the provisions of the Companies Act, 2013. These changes are subject to shareholder approval through a postal ballot and other necessary clearances.
TCL offers a range of products and services, including personal loans, home loans, business loans, consumer loans, loan against property, commercial and SME finance, cleantech finance, institutional distribution, private equity, wealth products distribution, leasing solutions, and Tata Cards.
In the third quarter, TCL reported a 15% year-on-year decline in standalone net profit, amounting to ₹566.42 crore compared to ₹664.35 crore in the same quarter of the previous year.
The meeting on Tuesday will provide further insight into TCL’s plans for fundraising and its potential IPO, as well as its compliance with regulatory requirements related to listing.
