Tata Capital initiates $2B IPO process
What's the story
Tata Capital, the financial services arm of the Tata Group, has started preparations for a $2 billion initial public offering (IPO). The company is in talks with a few bankers for the same. Kotak Investment Banking has been given the green light by Tata to start proceedings after a recent meeting.
Expansion plans
Tata Capital to appoint additional bankers by January
Tata Capital intends to onboard more bankers by January. The company has already roped in law firm Cyril Amarchand Mangaldas and investment bank Kotak Mahindra Capital as advisors for the IPO. The move is in accordance with Reserve Bank of India (RBI) regulations that require upper-layer non-banking financial companies (NBFCs) like Tata Sons and Tata Capital, to list their shares by September 2025.
Market impact
Tata Capital's IPO marks a significant milestone
The upcoming IPO of Tata Capital, which is expected to raise over ₹15,000 crore, will comprise a mix of primary and secondary share sales. It will be the second IPO from the Tata Group in two decades after Tata Technologies's successful listing in November last year. The last group-level IPO was by Tata Consultancy Services (TCS) in 2004, which launched a ₹5,500-crore offer.
Share performance
Tata Capital's unlisted shares and company valuation
Tata Capital's unlisted shares have jumped significantly, from ₹450 in December last year to ₹1,100 in April. They are currently trading at ₹900 in the unlisted market. Going by the outstanding number of shares of 3.74 billion by the end of FY24, the company is valued at ₹3.5 lakh crore in this market.
Business operations
Tata Capital's role and financial performance
Tata Capital serves as a key player in the Tata Group by serving the funding requirements of various entities linked to the conglomerate, including suppliers, vendors, and dealers. For the year ending March 31, 2024, Tata Capital reported a revenue of ₹18,178 crore - a 34% jump over FY23. The company reported a net profit of ₹3,315 crore for the period, a 12% increase over FY23 profits.
Asset growth
Tata Capital's assets and market response
Tata Capital had AUM of ₹158,479 crore as of March 2024, a sharp rise from ₹119,950 crore a year ago. The IPO news has also lifted other Tata Group stocks. Shares of Tata Chemicals gained on account of its nearly 3% stake in Tata Sons - the group's principal holding company and Tata Capital's largest shareholder.