MUMBAI: Tata Capital, the non-banking finance arm of the salt-to-aviation Tata Group has filed the final papers for a mega initial public offering (IPO) with the market regulator Securities and Exchange Board of India on Monday. The issue size, which is likely to be around Rs 17,000 crore, is primarily to meet the October 2022 Reserve Bank mandate for large shadow banks to go public before the end of this September.
Tata Sons which owns close to 88.6% in the company now, down from 93% before the recent rights issue, will sell up to 230 million shares in the offering, while the only external investor, the International Finance Corporation will sell 35.8 million shares while the company will issue 210 million new shares as part of the fresh issue, taking the total offer size to 475.8 million shares.
Proceeds from the fresh issue of 210 million fresh issue will be used to meet the future capital requirements including onward lending, according to the draft papers. The fresh issue will expand the company's equity base to 4.24 billion shares from the current 4.03 billion.
Tata Sons will dilute its stake by almost 10 percentage points through an IPO--from 88.6% to 78.8%--that combines a fresh issue and an offer for sale.
Though the draft papers did not mention the issue size, (as price discovery is yet to be completed) sources told TNIE that the issue size is likely to be around Rs 17,000 crore.
The IPO is being launched in compliance with RBI's rules that mandate listing for upper-layer non-bank lenders. Tata Capital, currently categorised as such, had three years to list following its classification.
As of March 2025, the company had total assets of Rs 24.85 trillion, up sharply from Rs 13.56 trillion in FY23. Total borrowings stood at Rs 20.84 trillion, while equity capital was Rs 3.32 trillion. Its gross loan book reached Rs 22.66 trillion.
Tata Capital serves 7 million customers through its 1,496 branches across over 1,100 locations and employs nearly 30,000.
Tata Capital, which according to the RBI classification is an upper layer NBFC, initially filed confidential IPO papers in April and received approval from the market regulator last month to proceed. The board of Tata Capital had approved the IPO plan late February this year.
Tata Capital Financial Services, which merged with Tata Capital later in January 2024, is on the regulator's list.
According to the Reserve Bank norms issued in October 2022, there are 15 large non-bank lenders, including Tata Sons, and all have to go public by this September. Though Tata Sons has met almost all conditions to not to be in the upper layer NBFC list, the RBI has not yet declassified the company.
In June, HDB Financials, the non-banking arm of HDFC Bank had gone public with a 12,500 crore issue. Bajaj Housing Finance, another firm in the RBI’s 'upper layer list', made a scintillating market debut on September 2024, closing the debut trade with a premium of 135% over the issue price.
While Tata Sons owns 92.83% in Tata Capital, Tata Sons also owns 68.51% in Tata Investment Corporation as of December 2024 which is the second largest shareholder with 2.5% but was recently merged with the former.
Other shareholders include Tata Investment Corporation which owns 2.5%, Tata Chemicals (0.09%), Tata Consumer Products (0.02%), Tata Motors (0.12%), Tata Power (0.06%) and the International Finance Corporation with 1.5%.
This IPO will be the first by a Tata Group entity after the bumper listing of Tata Technologies in 2023, which was oversubscribed by close to 69.4 times, raising Rs 3,042 crore. The issue got bids worth Rs 1.57 trillion from 73.58 lakh applications, breaking the record set by LIC’s issue in May 2022.
Tata Capital was established in 2007. Last October, the RBI had approved the merger of Tata Motors Finance to be merged with Tata Capital, making it the 12th largest NBFC, which offers a wide range of loans from housing to personal. The merger was completed in January 2024.
In FY24, the company had it’s best-ever profit of Rs 3,150 crore, up 37% over the previous fiscal, while loan book grew 35% to Rs 1.6 trillion.
According to a recent Crisil report, Tata Sons had infused Rs 6,097 crore into Tata Capital during the past five fiscals, of which Rs 2,500 crore was infused in fiscal 2019, Rs 1,000 crore in fiscal 2020, Rs 594 crore in fiscal 2023 and Rs 2003 crore in fiscal 2024.