After bumper listing, Tata Group will now bring IPO of financial services company

After the spectacular public issue of Tata Technologies, now Tata Group has started preparations for the IPO of its non-banking financial company (NBFC) Tata Capital. Moneycontrol has received this information from three different sources. Tata Technologies’ IPO came in November 2024, which was subscribed 69.43 times and listed at a premium of 140% on November 30. This was a big step for Tata Group to come out with an IPO after 19 years.

Tata Capital IPO: What is the planning?

According to sources, the proposed IPO of Tata Capital is taking shape soon.

• Objective of IPO:
  This is to ensure compliance with the upper layer NBFC norms of RBI.
• Size Estimate:
  The exact size of the IPO has not been decided yet, but it could be more than Rs 15,000 crore.

Role of advisors and banking partners

Sources said that major advisors and investment banks are being selected for this IPO.

• Selected Advisors:
  • Law Firm Cyril Amarchand Mangaldas.
  • Investment Bank Kotak Mahindra Capital.
• Further process:
  Talks will begin soon to involve other investment banks.
• Structure of IPO:
  The IPO will have a mix of new shares and offer for sale (OFS).

RBI rules and IPO deadline

RBI had released a list of upper layer NBFCs in September 2022, which included the names of 16 companies.

• Location of Tata Capital:
  Tata Capital is part of this list and it is mandatory to be listed on the stock exchange by September 2025.
• RBI rule:
  • Any upper layer NBFC is required to be listed within 3 years of notification.

Tata Capital’s Financial Performance (AUM)

Tata Capital’s Asset Under Management (AUM) is increasing rapidly.

• 31 March 2024: ₹1,58,479 crore.
• 31 March 2023: ₹1,19,950 crore.
• 31 March 2022: ₹94,349 crore.
• Ownership stake:
  • As of March 31, 2024, 92.83% of the equity shares were held by Tata Sons.
  • The remaining stake was held by other Tata group companies and trusts.

Tata Sons’ investment in Tata Capital

According to CRISIL Ratings, Tata Sons has invested a total of ₹6,097 crore in Tata Capital in the last 5 years.

• Major Investments:
  • FY 2018-19: ₹2,500 crore.
  • FY 2019-20: ₹1,000 crore.
  • FY 2022-23: ₹594 crore.
  • FY 2023-24: ₹2,003 crore.