Tata Capital IPO: Tata Group Eyes $11 Billion Valuation

Tata Group is preparing to list its financial services arm, Tata Capital, As per reports, with an expected valuation of approximately $11 billion, this initial public offering (IPO) is anticipated to be India’s largest public offering this year, with potential fundraising of up to $2 billion.

Structure of the Tata Capital IPO

The Board of Directors of Tata Capital recently approved the IPO, which will include a fresh issue of 23 crore equity shares along with an offer-for-sale (OFS) component. The company, in its exchange filing to NSE and BSE, stated that the IPO would be subject to market conditions, regulatory approvals, and other considerations. The face value of each equity share will be ₹10.

As per Reserve Bank of India (RBI) regulations for “upper layer” non-banking financial companies (NBFCs), Tata Capital is required to list on the stock exchanges by September 2025. The IPO is expected to help Tata Capital strengthen its position in the financial sector, leveraging its diversified business model across wealth services, commercial finance, consumer loans, and Tata Card distribution.

Tata Sons’ Investment in Tata Capital

Crisil Ratings reported that as of March 31, 2024, Tata Sons held a 92.83% stake in Tata Capital, with the remaining equity shares primarily owned by other Tata Group entities. Tata Sons has demonstrated a strong commitment to Tata Capital by infusing ₹6,097 crore into the company over the last five financial years. The investments included ₹2,500 crore in FY19, ₹1,000 crore in FY20, ₹594 crore in FY23, and ₹2,003 crore in FY24.

Tata Sons’ senior management has direct representation on Tata Capital’s Board, further reinforcing its strategic importance within the group. The continuous capital infusion highlights Tata Group’s intent to expand its footprint in the lending business.

Conclusion

Tata Capital’s IPO is set to be a significant milestone for the Tata Group, aligning with regulatory requirements and reinforcing its position in the financial services sector. With strong backing from Tata Sons and a diversified financial services portfolio, the company is poised to make a substantial impact in the Indian market.

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