IFC to book ₹2,278cr profit from Tata Capital IPO
What's the story
The International Finance Corporation (IFC), a member of the World Bank Group, is set to gain a massive profit from Tata Capital's upcoming ₹17,000 crore initial public offering (IPO). The IFC plans to offload 3.58 crore shares in this IPO. This will mark the partial exit from its early investment in Tata Capital's cleantech business made back in 2011.
Launch details
Tata Capital's IPO launch expected in early October
Tata Capital is expected to launch its ₹17,000 crore IPO in early October. This comes after the Reserve Bank of India (RBI) extended the deadline for listing its shares on stock exchanges. The non-banking finance company was initially given time till September 30 to make its debut on the bourses.
Partnership impact
IFC partnered with Tata Capital to set up TCCL
In 2011, IFC partnered with Tata Capital to establish Tata Cleantech Capital Ltd (TCCL). The company was set up to fund renewable and sustainable infrastructure projects. Over the last decade, TCCL has financed over 500 renewable projects across various sectors including solar, wind, biomass, small hydro water treatment and electric mobility.
Stake sale
Notional profit of ₹2,278 crore for IFC
After TCCL merged with Tata Capital, IFC now holds 7.16 crore shares or about 1.8% in the parent non-banking finance company (NBFC). Of this, it plans to offload 3.58 crore shares in the upcoming IPO. The rights issue price was ₹343 per share and at that valuation, this stake is worth nearly ₹2,458 crore translating into a notional profit of about ₹2,278 crore for IFC.
IPO structure
Fresh issue to boost Tier-I capital
The upcoming IPO will include a fresh issue of up to 21 crore shares and an offer for sale (OFS) of up to 26.58 crore shares. This includes 23 crore shares from promoter Tata Sons and 3.58 crore shares from IFC, as per the updated draft papers filed in August. The proceeds from the fresh issue will be used to boost Tier-I capital and support lending growth.