Tata Capital has approved plans for an initial public offering (IPO) consisting of a fresh issue of 23 crore equity shares and an offer-for-sale by existing shareholders. While specific details on the IPO remain undisclosed, this marks a significant development for the company, which has been a key player in India’s financial services sector since its establishment in 2007.
Rights Issue and Regulatory Compliance
Ahead of the IPO, Tata Capital’s board has decided to issue shares worth Rs 1,504 crore on a rights basis to its existing shareholders. This IPO would be the first by a Tata Group company since a major listing in 2023. The move aligns with the Reserve Bank of India’s mandate requiring ‘upper layer’ non-banking financial companies (NBFCs) to go public within three years of notification, which sets a deadline of September 2025.
Tata Capital Financial Services, which merged with Tata Capital in January 2024, also falls under this regulatory requirement. Other companies on the list include Bajaj Housing Finance, which witnessed a strong market debut in September 2023, soaring 135 percent above its issue price.
Tata Capital’s Market Position
As a subsidiary of Tata Sons, Tata Capital has a strong presence in the financial sector. According to a September 2024 report by Crisil Ratings, the company had an assets under management (AUM) of Rs 158,479 crore as of March 31, 2024. Tata Sons holds a 92.83 percent stake in Tata Capital, while the remaining shares are owned by other Tata Group companies and trusts.
Tata Sons has consistently infused capital into Tata Capital, totaling Rs 6,097 crore over the past five fiscal years. This includes Rs 2,500 crore in 2019, Rs 1,000 crore in 2020, Rs 594 crore in 2023, and Rs 2,003 crore in 2024, highlighting the group’s commitment to expanding its lending business.
Market Reaction to the Announcement
Following the IPO announcement, Tata Investment shares surged by 8 percent, reaching Rs 6,218 per share. This positive market response reflects investor confidence in Tata Capital’s growth potential and its anticipated public listing.
Conclusion
Tata Capital’s IPO is a crucial step in its expansion and regulatory compliance journey. With a strong financial backing from Tata Sons and a diverse loan portfolio, the company is well-positioned to make a significant impact in the Indian financial market.
