Financial services firm Tata Capital is likely to file preliminary papers with markets regulator Sebi to raise $2 billion (over ₹17,000 crore) through an initial public offering (IPO) only after getting final approval from the NCLT for Tata Motors Finance merger with the company, according to sources.
At this size, the company is expected to be valued at around $11 billion, they said.
The final order is awaited from the National Company Law Tribunal (NCLT), which is expected to be closed by the end of this financial year (FY25), sources said.
An email sent to Tata Capital regarding the filing of draft papers remained unanswered.
Tata Capital, identified as an upper-layer non-banking finance company (NBFC) by the Reserve Bank of India (RBI), already received its board approval to float the initial share sale.
The proposed IPO would comprise 2.3 crore equity shares by way of a fresh issue and an offer of sale (OFS) by certain existing shareholders, according to a disclosure made to stock exchanges.
Apart from the IPO, Tata Capital announced plans to raise funds through a rights issue to further bolster its financial position before the public listing.
If successful, this would be one of the biggest initial share sales in the country’s financial sector. This would also be the Tata Group’s second public market debut in recent years after the listing of Tata Technologies in November 2023.
The move is part of the company’s effort to comply with the RBI’s listing requirements.
As per the RBI mandate, upper-layer NBFCs are required to list on the stock exchange within three years of being designated as an upper-layer NBFC. Tata Capital was categorised as an upper-layer NBFC in September 2022.
Apart from Tata Capital, another upper layer NBFC HDB Financial Services, owned by HDFC Bank, is also gearing up to launch its IPO. The company filed its draft papers in October to garner Rs 12,500 crore through the initial share sale.
While law firm Cyril Amarchand Mangaldas and investment bank Kotak Mahindra Capital have been roped in as advisors to manage the company’s IPO, a draft red herring prospectus (DRHP) with Sebi will be filed only after receiving approval of the NCLT on the proposed merger, sources said.
In the Q3 earnings call of Tata Motors, the auto maker’s Group CFO PB Balaji said the Tata Motors Finance creditors meeting has been completed.
“Final orders (are) awaited from the NCLT, and we do expect closure for this by the end of this financial year,” he had stated.
In September, the Competition Commission of India (CCI) cleared the proposed merger.
In June 2024, the board of all three companies — Tata Capital, Tata Motors Finance, and Tata Motors — approved a merger of Tata Motors Finance with Tata Capital through an NCLT scheme of arrangement.
As consideration for the merger, Tata Capital will issue its equity shares to the shareholders of Tata Motors Finance, resulting in Tata Motors effectively holding a 4.7 per cent stake in the merged entity.
Tata Sons is a holding company of Tata Capital, owning a 92.83 per cent stake.