MUMBAI: The board of Tata Capital has approved a mega initial public offering that may raise up to Rs 15,000 crore in primary share sale and will comprise a combination of fresh issue of 23 crore shares and an offer-for sale by existing shareholders who include Tata Sons owning nearly 93% in the upper layer non-banking lender.
According to the Reserve Bank norms issued in September 2022, all large non-bank lenders (15 in total), including Tata Sons, have to go public by this September. Though the company statement did not offer details such as the date and size of the issue, according to sources, the issue will be worth around Rs 15,000 crore in the fresh issue side itself.
While Tata Sons owns 92.83% of 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%.Other shareholders include Tata Investment Corporation which owns 2.5%, Tata Chemicals (0.09%), Tata Consumer Products (0.02%), Tata Motors (0.12%) and Tata Power (0.06%).
International Finance Corporation owns 1.5% in the company. This IPO will be the first by a Tata group firm 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. Last month, while revising the list of upper layer NBFCs, the RBI had said that it had not taken a call on the Tata Sons’ application to cancel its NBFC licence.
The holding company of the group also has to get listed by this September if the RBI refuses to accept its application for deregistration of its licence. The firm does not want to go public. Tata Capital, which was established in 2007, has reportedly roped in Cyril Amarchand Mangaldas and Kotak Mahindra Capital as the advisors.
In September 2022, the RBI recognised Tata Capital as an upper layer NBFC and mandated it and other NBFC to go public by September 2025.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.
In FY24, the company reported its best-ever profit of Rs 3,150 crore, up 37% over the previous fiscal, while loan book grew 35% to Rs 1.6 trillion. Meanwhile, the board has also decided to issue shares worth up to Rs 1,504 crore on a rights basis to existing shareholders.
The record date for the issue has been fixed at February 25.In the run-up to the IPO plan, Tata Capital Financial Services, was merged with Tata Capital in January 2024.Bajaj Housing Finance, another firm in the RBI 'upper layer list', made a scintillating market debut on September 2024, closing the debut trade with a premium of 135% over the issue price.
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.Early this month, the Tata Capital board had agreed to change its memorandum of association and adopt a new set of articles of association, paving way for the initial public offer.