Tata Capital gears up for mega IPO, ropes in about 10 investment banks

Tata group financial services firm sets the ball rolling for a $2 bn maiden share sale

Tata Capital, the financial services arm of Tata Sons, has appointed roughly 10 investment banks to manage its initial public offering (IPO), which could be rolled out later this year.

 

SBI Capital Markets, Kotak Mahindra Capital, Axis Capital, JP Morgan, HDFC Bank, Citibank, ICICI Securities, HSBC Securities, IIFL Capital and BNP Paribas are the banks roped in to handle the share sale.

 

Tata Capital did not respond to an email request for comment.

 

“The filing process will take some time, and the issue size is estimated at around $2 billion,” said one banker involved in the transaction. “Timelines remain fluid, but the company has set the ball rolling on its listing plan with the appointment of marquee banks.”

 

The company may make a confidential filing with the market regulator by next month for the IPO, another banker said, adding that the timing of the IPO will also depend on market conditions.

 

Last month, Tata Capital had secured its board approval for an initial public offering (IPO) and a rights issue.

 

If the IPO materialises, this will only be the second maiden share sale by a Tata group firm in nearly two decades after Tata Technologies’ in 2023 and Tata Consultancy Services in 2004.

 

In a regulatory filing, Tata Capital said the IPO will consist of a fresh issue of up to 230 million equity shares, each with a face value of Rs 10, alongside an offer for sale by existing shareholders.

 

Ahead of its IPO, Tata Capital will raise about Rs 1,504 crore via a rights issue, which Tata Sons — its 93 per cent owner — will fully subscribe to. The listing aligns with Reserve Bank of India (RBI) regulations requiring all “upper layer” non-banking financial companies (NBFCs) to go public by September.

 

Fitch Ratings expects Tata Sons to retain at least a 75 per cent stake in Tata Capital post-listing. The Tata group has injected Rs 6,097 crore into Tata Capital over the past five years, signalling its intent to expand in financial services.

 

Following Tata Capital’s merger with Tata Motors Finance, TMF Holdings — a core investment company that owns TMFL — will hold a 4.7 per cent stake, while other Tata group entities and the International Finance Corporation (IFC) retain smaller shares.

 

In a communication to its shareholders, the company emphasised that as its loan portfolio and asset base continue to grow, it will need additional capital to maintain the required capital adequacy ratios. To meet this need, the company plans to raise capital periodically, including through rights issues, the company had said in a communication to the shareholders. 

Fasten your seat belts

 

*  Banks selected include SBI Capital Markets, Kotak Mahindra Capital, JP Morgan, and others 

 

*  The IPO size is estimated around $2 billion, with a potential confidential filing soon 

 

*  Tata Capital’s IPO follows board approval and precedes a rights issue by Tata Sons

 

*  Tata group has injected ₹6,097 crore into Tata Capital over the past five years