Tata Capital IPO: Board Gave Approval to Go Public in EGM

As per news reports, Tata Capital Ltd., the financial services arm of the Tata Group, has moved a step closer to entering the public markets. In a significant development, the company’s shareholders have approved its proposed Initial Public Offering (IPO) during an Extraordinary General Meeting (EGM) held recently. This approval marks a pivotal milestone in the company’s listing journey and aligns with its strategic growth objectives.

Shareholders Vote in Favour of the IPO

According to a news report, the proposal to initiate the IPO was passed by the requisite majority during the EGM. A total of 367.9 crore votes were cast in favour by 230 members, while just 361 votes from eight members opposed the motion, as per the company’s exchange filing. The decision sets the stage for Tata Capital to become the 17th publicly traded entity under the Tata Group umbrella.

EGM Clears Additional Key Proposals

Alongside the IPO resolution, shareholders also approved several other significant proposals during the EGM. These included:

• An increase in investment limits for non-resident Indians (NRIs) and overseas citizens of India (OCIs).

• Amendments to the company’s Employee Stock Option Scheme (ESOP), which could pave the way for greater employee participation in the company’s equity.

IPO Structure and Fundraising Potential

As per news sources, Tata Capital’s IPO could raise around $2 billion (equivalent to over ₹17,000 crore), potentially valuing the company at approximately $11 billion. The offering is expected to comprise a fresh issue of 2.3 crore equity shares and an offer-for-sale by certain existing shareholders.

This dual structure suggests that the company aims to infuse fresh capital into its operations while also providing an exit route for some of its early investors.

Pre-IPO Fundraising Activity

Ahead of the proposed public listing, Tata Capital completed a rights issue earlier this week, raising ₹1,500 crore. Tata Sons, which currently holds a 93% stake in the company, fully subscribed to its entitlement. Other shareholders, including the International Finance Corporation, also participated in the issue. The capital raised is expected to support the company’s lending activities and improve its leverage ratios.

Regulatory Milestones and Classification

Tata Capital has already received board approval for the IPO and is classified as an ‘upper-layer’ non-banking financial company (NBFC) by the Reserve Bank of India (RBI). This classification brings it under tighter regulatory supervision, highlighting the significance of transparency and governance in its operations.

The company is also awaiting a final order from the National Company Law Tribunal (NCLT) regarding its proposed merger with Tata Motors Finance. The order is expected by the end of the current financial year, following which Tata Capital is likely to file its draft red herring prospectus with the Securities and Exchange Board of India (SEBI).

Conclusion

With shareholder approval now secured and other regulatory steps underway, Tata Capital’s IPO journey appears to be gaining momentum. If successful, the public listing will mark a new chapter in the company’s evolution and expand the Tata Group’s presence in the capital markets. However, it is important to note that the listing timeline and final structure remain subject to regulatory approvals and market conditions.

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