Tata Capital moving ahead for $2 bn IPO, India's biggest in 2025
Tata Capital Ltd has received the approval of India’s markets regulator to proceed with its plans for an initial public offering that may fetch about $2 billion, in what is expected to be the country’s biggest listing this year. The non-banking finance arm of Tata Group aims to launch the share sale as early as August. The approval clears the way for the company to incorporate feedback from the regulator into its prospectus, before it starts marketing the deal. The development comes as India’s market for new listings sees signs of picking up, with HDB Financial Services Ltd. scheduling to launch a billion-dollar-plus stock offering soon. The parent Tata Group is seeking a valuation of up to $11 billion for the unit.
The initial public offering is expected to comprise a fresh issue of 23 crore equity shares and an offer-for-sale by certain existing shareholders. Ahead of its planned listing, Tata Capital raised Rs. 1,500 crore via a rights issue in late February. Tata Sons, which holds a 93% stake in the company, subscribed to its entire entitlement, while other small shareholders, including the International Finance Corp., also participated. The company said it planned to use the proceeds for further lending and improving its leverage ratios. Once the listing goes through, Tata Capital will be the 17th Tata Group company to be publicly traded. For fiscal 2025, the Tatas' financial services arm reported a profit of Rs. 3,655 crore, an increase from Rs. 3,327 crore in the previous fiscal, while its revenue surged to Rs. 28,313 crore from Rs. 18,175 crore.
Tata Capital's confidential DRHP filing made it an entrant in a growing group of companies that have gone through the pre-filed confidential route. The DRHP is released only when the company decides to go live with its IPO. A confidential filing allows a company to protect what it believes to be sensitive data from its competitors. This is an optional mechanism where companies file for their IPO without disclosing their draft red herring prospectus to the public. SEBI enabled this in December 2022, and Tata Play Ltd. was the first company to make use of it.
