Tata Capital to file IPO papers to raise over ₹17,000 crore after NCLT nod on merger with Tata Motors Fin: Report | Stock Market News

Tata Capital, a financial services firm, is expected to file preliminary documents with market regulator SEBI for a $2 billion (over ₹17,000 crore) initial public offering (IPO) only after receiving final approval from the NCLT for its merger with Tata Motors Finance, according to news agency PTI.

At this scale, the company’s valuation is projected to be around USD 11 billion, sources were quoted as saying by PTI.

The final order from the National Company Law Tribunal (NCLT) is still pending and is anticipated to be completed by the end of this financial year (FY25), according to sources.

Tata Capital, classified as an upper-layer non-banking finance company (NBFC) by the Reserve Bank of India (RBI), has already secured board approval to launch its initial public offering (IPO).

As per a stock exchange disclosure, the planned IPO will include 2.3 crore equity shares through a fresh issue and an offer for sale (OFS) by select existing shareholders.

In addition to the IPO, Tata Capital intends to raise funds via a rights issue to strengthen its financial position ahead of the public listing.

If successful, this would rank among the largest IPOs in India’s financial sector. It would also mark the Tata Group’s second public market debut in recent years, following Tata Technologies’ listing in November 2023.

The move is part of the company’s effort to comply with the RBI’s listing requirements.

As per the RBI mandate, upper-layer NBFCs are required to list on the stock exchange within three years of being designated as an upper-layer NBFC. Tata Capital was categorised as an upper-layer NBFC in September 2022.

Apart from Tata Capital, another upper layer NBFC HDB Financial Services, owned by HDFC Bank, is also gearing up to launch its IPO. The company filed its draft papers in October to garner ₹12,500 crore through the initial share sale.

While law firm Cyril Amarchand Mangaldas and investment bank Kotak Mahindra Capital have been roped in as advisors to manage the company’s IPO, a draft red herring prospectus (DRHP) with Sebi will be filed only after receiving approval of the NCLT on the proposed merger, sources said.

In the Q3 earnings call of Tata Motors, the auto maker’s Group CFO PB Balaji said the Tata Motors Finance creditors meeting has been completed.

“Final orders (are) awaited from the NCLT, and we do expect closure for this by the end of this financial year,” he had stated.

In September, the Competition Commission of India (CCI) cleared the proposed merger.

In June 2024, the board of all three companies — Tata Capital, Tata Motors Finance, and Tata Motors — approved a merger of Tata Motors Finance with Tata Capital through an NCLT scheme of arrangement.

As consideration for the merger, Tata Capital will issue its equity shares to the shareholders of Tata Motors Finance, resulting in Tata Motors effectively holding a 4.7 per cent stake in the merged entity.

Tata Sons is a holding company of Tata Capital, owning a 92.83 per cent stake.

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