Tata Capital Ltd is making changes in its operation and adding members to its board as part of the Tata group’s plan to make the non-bank lender a public company, according to LiveMint.
The group is aiming to have an Initial Public Offering (IPO) for Tata Capital in 2025. To prepare for this, the company’s board has been expanded, and some mergers have occurred among Tata Capital’s affiliated companies.
The IPO process is set to kick off in March 2024 with the appointment of investment bankers.
The Reserve Bank has categorised Tata Sons as an ‘upper-layer’ NBFC (Non-Banking Financial Company). According to RBI regulations, ‘upper-layer’ NBFCs are required to be listed on stock exchanges. Unlisted ‘upper-layer’ NBFCs must complete their listing within three years of receiving this classification. RBI designated Tata Sons as an NBFC in September 2022, and the three-year period will conclude in September 2025.
According to the report, in preparation for the IPO, Tata Capital is in the final stages of merging some of its important subsidiaries. These include Tata Capital Financial Services Ltd, Tata Capital Housing Finance Ltd, Tata Cleantech Capital Ltd, Tata Securities Ltd, Tata Capital Pte. Ltd, Tata Capital Advisors Pte. Ltd, and Tata Capital Plc. They expect RBI’s approval for these mergers by the end of the year.
Tata Capital Financial Services, another Tata company, has also been classified as an ‘upper-layer’ NBFC by the Reserve Bank. However, it is not mandated to list separately because it is in the process of merging with Tata Sons. It’s important to mention that Tata Trusts holds a 66% stake in Tata Sons, while the Shapoorji Pallonji Group holds an 18.4% stake. Tata Sons serves as the holding company for the entire Tata Group, encompassing all its subsidiary companies.
Currently, unlisted shares of Tata Capital are trading at ₹425 in the grey market, valuing the company at about ₹1.5 trillion. Tata Capital’s promoters may reduce their ownership by 10-20%, making it one of the largest IPOs ever, the report added.