Confidential Filing with SEBI Marks a Strategic Move for Tata Group’s Financial Arm
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Mumbai: Tata Capital, the financial services subsidiary of Tata Sons, has initiated a confidential pre-filing with the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO), as reported by Moneycontrol. This move leverages SEBI’s pre-filing mechanism introduced in late 2022, allowing companies to kickstart IPO procedures without publicly disclosing sensitive business data.
The planned IPO aims to raise around Rs 15,000 crore, making it one of the largest offerings from the Tata Group. The issue will comprise both fresh equity issuance and an offer for sale (OFS) by existing stakeholders, including Tata Sons and the International Finance Corporation (IFC), who are expected to lead the dilution process.
IPO Structure and Advisory Panel
Tata Capital’s board approved the IPO on February 25, with plans to issue up to 230 million new equity shares. The IPO’s timing will depend on market conditions and regulatory approvals. To manage the offering, Tata Capital has engaged a robust advisory team of ten investment banks, including Kotak Mahindra Capital, Axis Capital, Citi, JP Morgan, ICICI Securities, HSBC Securities, BNP Paribas, SBI Capital, HDFC Bank, and IIFL Capital.
Fitch Ratings noted that despite the dilution, Tata Sons is expected to maintain a minimum 75% stake post-IPO. As of March 31, 2024, Tata Sons held a 92.83 per cent stake, with the remainder held by other Tata Group companies and IFC.
Strong Financial Performance and Growth
Tata Capital, registered as a systemically important non-deposit-taking Core Investment Company with the RBI, serves both wholesale and retail finance markets. The company’s assets under management (AUM) surged to Rs 158,479 crore by FY24, up from Rs 119,950 crore in FY23 and Rs 94,349 crore in FY22, as per Crisil Ratings.
Tata Sons has actively supported Tata Capital through capital infusions totaling Rs 6,097 crore over the last five fiscal years. This includes Rs 2,500 crore in FY19, Rs 1,000 crore in FY20, Rs 594 crore in FY23, and Rs 2,003 crore in FY24. Additionally, Tata Capital recently completed a Rs 1,504 crore rights issue, with Tata Sons expected to fully subscribe.
Joining the Confidential IPO Trend
Tata Capital’s confidential filing places it alongside other major Indian companies that have opted for this route, including Tata Play, Oyo, Swiggy, Vishal Mega Mart, Credila Financial Services, Indira IVF, and PhysicsWallah.
The pre-filing mechanism allows firms to submit the draft red herring prospectus (DRHP) discreetly, enabling internal assessments based on SEBI’s feedback before making public disclosures. If the IPO proceeds, the DRHP must be made public 21 days before the red herring prospectus is filed. If not, companies can quietly abandon the process without affecting market sentiment.
