Tata Capital Files for IPO to Raise Funds Amid Regulatory Push
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Tata Sons-backed Tata Capital has filed draft papers with the Securities and Exchange Board of India (SEBI) for its highly anticipated initial public offering (IPO), marking a significant step towards meeting regulatory obligations and future growth.
The total offer size for the IPO is pegged at 475.8 million equity shares, comprising a fresh issue of 210 million shares and an offer-for-sale (OFS) of 265.8 million shares by existing shareholders.
In the OFS component, Tata Sons, the principal investment holding company of the Tata Group, plans to offload up to 230 million shares, while International Finance Corporation (IFC) will sell up to 35.8 million shares.
Proceeds from the fresh issue will be utilized to support Tata Capital's future capital requirements, including onward lending, in line with its core financial services operations.
The offering is being managed by a consortium of investment banks, including Kotak Mahindra Capital, BNP Paribas, and Citigroup Global Markets.
Tata Capital had initially filed confidential IPO documents in April 2024, receiving SEBI's nod last month. As part of the regulatory process, the company has now submitted its updated Draft Red Herring Prospectus (DRHP), initiating the next phase of public review and feedback before finalizing the offer.
The Reserve Bank of India (RBI) mandates that all upper-layer non-banking financial institutions (NBFCs) must get listed before completing three years after classification. Tata's financial arm was classified as an upper-layer NBFC in 2022.
The IPO aligns with regulatory requirements, as the RBI mandates that upper-layer NBFCs must list within three years of their classification. Tata Capital was designated as an upper-layer NBFC in September 2022.
In January 2024, Tata Capital Financial Services merged with Tata Capital, further streamlining operations ahead of the IPO and fulfilling key compliance obligations.
The IPO will not only help the company bolster its capital base but also mark a pivotal moment for the Tata Group as it aligns its financial services arm with the RBI's vision of greater transparency and governance in the NBFC sector.
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