Tata Capital IPO Delayed? The USD 2 Bln Mega Listing Awaits NCLT's Green Signal For Tata Motors Fin Merger

Tata Capital, the leading financial services firm under the Tata Group, is currently gearing up to hit a major milestone with its upcoming initial public offering (IPO). The company initially announced its plans to raise USD 2 billion or Rs 17,000 crore through this offering, making it one of the biggest IPOs in the Indian financial sector. However, the final approval now remains in the hands of the National Company Law Tribunal (NCLT) for the merger with Tata Motors Finance, which is a very important criterion before filing draft papers with SEBI, as per a PTI report.

Tata Capital IPO Awaits NCLT Approval

The much-anticipated Tata Capital IPO listing depends upon the NCLT's approval of the Tata Motors Finance merger. Sources suggest that the final ruling from the tribunal is expected by the end of the financial year (FY25). This merger is expected to significantly strengthen Tata Capital's position in the non-banking finance company (NBFC) sector which will further allow it to offer an expanded range of financial solutions.

Tata Capital IPO Size and Valuation

Tata Capital, which has been classified as an upper-layer NBFC by the Reserve Bank of India (RBI), has already secured board approval to proceed with the IPO. At a proposed size of USD 2 billion, the IPO could value Tata Capital at approximately USD 11 billion. The offering will include a fresh issue of 2.3 crore equity shares along with an offer for sale (OFS) by certain existing shareholders.

Last Month along with the IPO announcements , Tata Capital approved a Rs.1,504 crore rights issue for its existing shareholders. In a board meeting held on Tuesday, the directors sanctioned the proposal to raise funds through a rights issue by offering equity shares with a face value of Rs.10 each.

Tata Capital-Tata Motors Finance Merger

The merger of Tata Capital and Tata Motors Finance got an NCLT approval in June last year. The merger of Tata Capital and Tata Motors Finance is expected to create a big financial services entity under the Tata Group umbrella. Tata Motors Finance, being a key player in the vehicle financing sector, will integrate its operations with Tata Capital to offer a more comprehensive suite of financial products. This upcoming merger has also received clearance from the Competition Commission of India (CCI) in September last year as per reports.

Tata Capital IPO Market Impact

The Tata Capital IPO is set to be Tata Group's second major listing in recent years, following the successful public debut of Tata Technologies in November 2023. The IPO could also be compared to HDB Financial Services, an NBFC arm of HDFC Bank, which has been exploring similar listing plans. Currently, Tata Sons Pvt. Ltd. holds a dominant 92.83% stake in Tata Capital, with smaller holdings by Tata Investment Corporation Ltd. (2.15%), Tata Consumer Products Ltd. (0.02%), Tata Chemicals Ltd. (0.09%), Tata Motors Ltd. (0.12%), and Tata Power Company Ltd. (0.06%). This strong backing from Tata Group entities provides market confidence in the upcoming listing of the company.