Financial services firm Tata Capital is reportedly gearing up to file preliminary papers with markets regulator Sebi to raise $2 billion (over ₹17,000 crore) through an initial public offering (IPO) only after receiving final approval from the NCLT for Tata Motors Finance merger with the company, as per sources.
The company is expected to be valued at around $11 billion at this size, the sources added.
The final order from the National Company Law Tribunal (NCLT) is anticipated to be received by the end of this financial year (FY25), sources mentioned.
When reached out for a comment on the filing of draft papers, Tata Capital did not immediately respond.
Tata Capital, recognized as an upper-layer non-banking finance company (NBFC) by the Reserve Bank of India (RBI), has already obtained approval from its board to proceed with the initial share sale.
The proposed IPO will include 2.3 crore equity shares through a combination of a fresh issue and an offer of sale (OFS) by certain existing shareholders, as disclosed to stock exchanges.
In addition to the IPO, Tata Capital has revealed plans to raise funds through a rights issue to strengthen its financial position before going public.
If successful, this IPO could be one of the largest in the financial sector in the country. This move marks the Tata Group’s second public market debut in recent years following the listing of Tata Technologies in November 2023.
The decision to go public is in line with the company’s efforts to meet the RBI’s listing requirements.
According to the RBI mandate, upper-layer NBFCs must list on the stock exchange within three years of being classified as an upper-layer NBFC. Tata Capital was designated as an upper-layer NBFC in September 2022.
Apart from Tata Capital, another upper-layer NBFC, HDB Financial Services, owned by HDFC Bank, is also preparing for its IPO. The company filed its draft papers in October to raise Rs 12,500 crore through the initial share sale.
Legal firm Cyril Amarchand Mangaldas and investment bank Kotak Mahindra Capital have been appointed as advisors to manage Tata Capital’s IPO, with a draft red herring prospectus (DRHP) set to be filed with Sebi after receiving NCLT approval for the proposed merger, according to sources.
During Tata Motors’ Q3 earnings call, Group CFO PB Balaji mentioned that the Tata Motors Finance creditors meeting has concluded.
“We are awaiting final orders from the NCLT, and we expect to finalize this process by the end of this financial year,” he said.
The Competition Commission of India (CCI) approved the proposed merger in September.
In June 2024, the boards of Tata Capital, Tata Motors Finance, and Tata Motors approved the merger of Tata Motors Finance with Tata Capital through an NCLT scheme of arrangement.
As part of the merger agreement, Tata Capital will issue its equity shares to Tata Motors Finance shareholders, resulting in Tata Motors holding a 4.7% stake in the combined entity.
Tata Sons, the holding company of Tata Capital, currently holds a 92.83% stake in the company.
