Tata Capital Gears Up for $2 Billion IPO Following NCLT Approval
Tata Capital, a prominent upper-layer non-banking finance company (NBFC) in India, is on the brink of launching a massive $2 billion initial public offering (IPO) pending the final green light from the National Company Law Tribunal (NCLT). This significant move comes on the heels of the proposed merger between Tata Motors Finance and Tata Capital, a development eagerly awaited by market analysts and investors alike.
The NCLT is expected to deliver its verdict on the merger by the end of the fiscal year 2025, setting the stage for Tata Capital’s IPO journey. While independent verification of this crucial step was unattainable, sources reported that Tata Capital has already secured approval from its board to forge ahead with the IPO.
The forthcoming IPO is slated to encompass 2.3 crore equity shares, including a fresh issue and an offer for sale (OFS) by select existing shareholders, as revealed in disclosures made to stock exchanges. In a strategic move to fortify its financial standing ahead of the public listing, Tata Capital is also contemplating a rights issue.
If all goes according to plan, this IPO is poised to be one of the most substantial offerings in India’s financial sector, marking the Tata Group’s second major foray into the public market in recent years. The listing of Tata Technologies in November 2023 laid the groundwork for this upcoming milestone.
Regulatory imperatives underscore the urgency of Tata Capital’s IPO, with the Reserve Bank of India (RBI) stipulating that upper-layer NBFCs must go public within three years of receiving such classification. Notably, Tata Capital ascended to the status of an upper-layer NBFC in September 2022, setting the stage for its imminent debut on the stock market.
In a parallel development within the financial landscape, HDB Financial Services, another upper-layer NBFC under the aegis of HDFC Bank, is also gearing up for its IPO after filing draft papers to raise a substantial ₹12,500 crore. The stage is set for a dynamic shift in the financial sector as these major players gear up for public listings.
To navigate the complexities of the IPO process, Tata Capital has enlisted the services of esteemed advisors, including law firm Cyril Amarchand Mangaldas and investment bank Kotak Mahindra Capital. While preparations are well underway, the filing of the draft red herring prospectus (DRHP) with SEBI hinges on the NCLT’s official nod post-merger.
During the recent Q3 earnings call for Tata Motors, Group CFO PB Balaji provided insights into the merger process, confirming the completion of the creditors’ meeting for Tata Motors Finance. With bated breath, the financial community awaits the final orders from the NCLT, anticipated to materialize by the fiscal year’s end.
The wheels were set in motion for the merger between Tata Capital, Tata Motors Finance, and Tata Motors back in June 2024, following approval by the respective boards under an NCLT scheme of arrangement. Post-merger, Tata Capital will issue equity shares to Tata Motors Finance shareholders, culminating in Tata Motors holding a 4.7% stake in the amalgamated entity.
At the heart of Tata Capital’s strategic maneuvers lies Tata Sons, the primary stakeholder holding a commanding 92.83% stake in the company. As the IPO saga unfolds, all eyes are on the NCLT’s decisive verdict, poised to usher in a new chapter in Tata Capital’s journey towards public listing and market prominence.
