Tata Capital is expected to proceed with filing preliminary documents for a USD 2 billion (over Rs 17,000 crore) initial public offering (IPO) only after receiving the final approval from the National Company Law Tribunal (NCLT) for the merger with Tata Motors Finance. Sources indicate that the valuation of the company is estimated to be around USD 11 billion. The final order from the NCLT is anticipated by the end of the current financial year (FY25).
The company, designated as an upper-layer non-banking finance company (NBFC) by the Reserve Bank of India (RBI), has already obtained board approval for the IPO. The offering will consist of 2.3 crore equity shares through a fresh issue and an offer for sale (OFS) by select existing shareholders. Additionally, Tata Capital has announced a rights issue to strengthen its financial position before its public listing.
This IPO, if successful, would mark one of the largest initial share sales in the financial sector, making it the second major public listing by a Tata Group entity in recent years, following the debut of Tata Technologies in November 2023. The move aligns with the RBI’s requirement for upper-layer NBFCs to list on the stock exchange within three years of being classified as such, a designation that Tata Capital received in September 2022.
HDB Financial Services, another upper-layer NBFC owned by HDFC Bank, is also in the process of launching its IPO and has already submitted draft papers for a Rs 12,500 crore share sale.
Tata Capital has engaged Cyril Amarchand Mangaldas as its legal advisor and Kotak Mahindra Capital as its investment banking partner for the IPO. However, the draft red herring prospectus (DRHP) will only be filed with the Securities and Exchange Board of India (SEBI) once the NCLT grants approval for the merger.
During Tata Motors’ Q3 earnings call, the company’s Group CFO, PB Balaji, confirmed that the creditors’ meeting for Tata Motors Finance had been completed, and the final order from the NCLT was awaited, with expectations of closure by the end of the financial year. The merger was previously cleared by the Competition Commission of India (CCI) in September.
In June 2024, the boards of Tata Capital, Tata Motors Finance, and Tata Motors approved the merger through an NCLT scheme of arrangement. Under this arrangement, Tata Capital will issue equity shares to Tata Motors Finance shareholders, resulting in Tata Motors acquiring a 4.7 per cent stake in the merged entity.
Tata Sons, the principal holding company of Tata Capital, currently holds a 92.83 per cent stake in the firm.
