Shares of Tata Motors and Tata Investments rose up to 3 per cent on March 4, amid reports that Tata Capital, the financial services arm of the Tata Group, is eyeing a valuation of $11 billion for its upcoming public offering.
While Tata Motors holds about 4 per cent stake in Tata Capital, Tata Investments holds about 2 per cent equity, which means a higher valuation for the company would bode well for the other two Tata Group companies.
Meanwhile, Tata Investments (TICL) also acts as the investment arm of the Tata Group, holding stakes in several Tata companies. Hence, any major development at the group level, such as Tata Capital’s IPO, boosts TICL’s prospects, as it benefits indirectly from the rising valuation of its portfolio companies.
In this sense, shares of Tata Investments were trading 3 per cent higher at Rs 6,097.65 on the NSE, while those of Tata Motors were trading marginally higher at Rs 623.45.
Tata Group is eyeing a valuation of around $11 billion for its financial and investment services arm, Tata Capital, in what could be India’s biggest IPO this year, Bloomberg reported, citing sources familiar with the matter. The public offering is expected to raise up to $2 billion, though final details may emerge as discussions progress.
Tata Capital’s board of directors recently approved the IPO plans, which will include a fresh issue of up to 23 crore shares with an offer for sale (OFS) component, as disclosed in its regulatory filings with the NSE and BSE.
The financial services arm is mandated to list on stock exchanges by September 2025 under the Reserve Bank of India’s “upper layer” NBFC rules. According to Crisil Ratings, Tata Sons holds a 92.83 per cent stake in Tata Capital as of March 31, 2024, while the remaining shares are largely held by other Tata Group entities.
Tata Sons has shown strong support for Tata Capital by investing Rs 6,097 crore in the last five financial years – including Rs 2,500 crore in FY19, Rs 1,000 crore in FY20, Rs 594 crore in FY23 and Rs 2,003 crore in FY24.
The presence of key officials of Tata Sons on the board of Tata Capital makes it clear that the group is committed to expanding its presence in the debt sector.
