Tata Capital now eyes valuation of $20B in upcoming IPO
What's the story
Tata Capital Ltd is eyeing a valuation between $18 billion and $20 billion for its upcoming initial public offering (IPO) in India. The firm could file an updated draft red herring prospectus (DRHP) as early as this week, according to Bloomberg. This revised valuation is significantly higher than the earlier target of around $11 billion.
Influence
Revised valuation bolstered by rights issue
The revised valuation for Tata Capital comes after a successful rights issue and the strong performance of other Indian IPOs, including HDB Financial Services Ltd. The latter drew strong demand and raised some $1.5 billion. The upcoming IPO is expected to raise around $2.2 billion in total, with launch plans set for early September this year.
Market position
Tata Capital may become India's 4th-largest shadow bank
If the IPO goes as planned, Tata Capital would become India's fourth-largest shadow bank. Currently, Bajaj Finance leads with a market cap of around $69 billion, followed by Bajaj Finserv and Jio Financial Services Ltd, which have valuations of $38 billion and $23 billion respectively. HDB Financial Services debuted earlier this month with a valuation of about $7.7 billion, and gained almost 14% on its first day of trading.
Revival
Indian equity market's resurgence
The Indian equity market is witnessing a resurgence with several major listings in the pipeline. This includes LG Electronics Inc's local unit, which plans to raise up to $1.7 billion. Kotak Mahindra Capital estimates that over $30 billion will be raised through Indian IPOs in the next 12 months, an executive from the bank told Bloomberg this week.