Tata Capital plans to raise $750 mn via ECBs under $2 bn MTN programme

The fundraising comes as the company prepares for an initial public offering (IPO), expected by September, pending shareholder approval

Tata Capital, the financial services arm of the Tata group, is seeking to ring in up to $750 million through external commercial borrowing (ECB) as part of its $2 billion medium-term note (MTN) programme.

 

The proceeds will be used for on-lending and other businesses, according to bankers familiar with the matter.

 

The fundraising comes as the company prepares for an initial public offering (IPO), expected by September. The IPO is awaiting shareholder approval.

 

In December, Tata Capital sought clearance from the Reserve Bank of India (RBI) to mobilise over $750 million from international markets.

 

Its subsidiary, Tata Capital Housing Finance, also asked for approval to raise $200 million, according to the RBI data.

 

HSBC and Standard Chartered have been appointed joint book-runners for the issue, according to Bloomberg.

 

Tata Capital is expected to launch the dollar-denominated senior unsecured bond with a three-year tenor, maturing in December 2028, under its MTN programme. This depends on market conditions. Such notes, typically maturing in five to 10 years, allow companies to tap investors for debt on a rolling basis, with maturities extending up to 30 years.

 

Tata Capital is not alone in courting foreign capital. Reliance Industries is in the market for $3 billion in overseas debt, with offers due by mid-March.

 

Meanwhile, Shriram Finance is raising around $1.5 billion from a commercial bank for on-lending, the RBI data shows.

 

In January, S&P Global Ratings had assigned its “BBB-” rating to the foreign-currency long-term issue of Tata Capital’s proposed dollar-denominated senior unsecured notes.

 

At the end of February, Tata Capital’s board approved the IPO and a rights issue, making it the second company in the Tata stable to go public in two years, following Tata Technologies’ listing in November 2023.

 

While the company has not disclosed the IPO size, banking sources estimate it to between $1.5 billion and $1.7 billion.

 

Ahead of the IPO, Tata Capital approved a rights issue at a face value of ₹10 per share to raise ₹1,504 crore.

 

Tata Sons, the group’s holding company, will fully subscribe to the offer. It owns 93 per cent in Tata Capital.

 

Tata Projects board to discuss rights issue

 

The board of Tata Projects, an unlisted entity, will meet on Thursday to discuss a proposal for raising funds through a rights issue of equity shares.

 

It will consider convening an extraordinary general meeting of its shareholders to seek approval for an increase in the company’s authorised share capital, according to the company’s regulatory filings.

 

Tata Sons holds 57.31 per cent stake in Tata Projects while other key shareholders include Tata Power (30.81 per cent), Tata Chemicals (6.16 per cent), Voltas (4.3 per cent), and Tata Industries (1.42 per cent).