Tata Capital board clears ₹1,752 cr rights issue ahead of IPO plan

Tata Sons may subscribe to ₹1,630 crore of the issue as Tata Capital gears up for its $2 billion IPO, in compliance with RBI's NBFC listing mandate by September

The board of Tata group’s financial services firm Tata Capital Ltd (TCL) has approved a ₹1,752 crore rights issue ahead of its planned initial public offering (IPO), expected by September, the company said in a stock exchange filing on Thursday.

 

Tata Sons Ltd, the holding company of the Tata group, is likely to subscribe to ₹1,630 crore of the issue, according to people familiar with the matter. The capital infusion comes as Tata Capital gears up for its $2 billion IPO, which would mark one of the biggest listings in the Indian financial sector this year. 

 

In the same meeting, the board also cleared a proposal to raise up to ₹30,000 crore through various debt instruments, including secured, unsecured, subordinated, perpetual, or market-linked redeemable non-convertible debentures as well as green bonds. The debt will be issued in one or more tranches on a private placement basis, the company said. The proceeds of the issue will be used by the company for on-lending purposes.

 

Tata Sons, which holds a 93 per cent stake in Tata Capital, had subscribed to the company’s last rights issue in March, contributing ₹1,400 crore out of the total ₹1,504 crore raised. The remaining stake is held by Tata Investment Corporation Ltd, the TCL Employee Welfare Trust, and other minority investors. 

 

The Tata group is preparing to list Tata Capital in line with a Reserve Bank of India (RBI) directive that mandates all upper-layer non-banking financial companies (NBFCs) to go public by September this year.

 

Tata Capital has secured approval from the Securities and Exchange Board of India (Sebi) to launch its IPO, according to people familiar with the matter.

 

Meanwhile, Tata Sons has cleared all its outstanding bank debt and approached the RBI, seeking reclassification to remove its designation as an upper-layer NBFC. The application is currently under review by the central bank.