Tata Capital, Backed by Tata Sons, Files for IPO: Key Details Inside
News Synopsis
Tata Capital, the financial services arm of the Tata Group, has filed its draft red herring prospectus (DRHP) with SEBI for an initial public offering (IPO). The company aims to raise capital through a combination of fresh issue and offer for sale (OFS), totalling 47.58 crore equity shares.
Of this, 21 crore shares will be issued as fresh equity, while 26.58 crore shares will be offered by existing shareholders. The IPO will facilitate stake dilution by Tata Sons and International Finance Corporation (IFC), among others.
Tata Sons to Reduce Stake Below 75%
Tata Sons, the promoter and majority shareholder, currently holds 88.6% in Tata Capital on a fully diluted basis. It plans to offload up to 23 crore shares, bringing its post-IPO stake down to 74.2% to meet regulatory listing norms.
International Finance Corporation, another shareholder, intends to sell 3.58 crore shares, reducing its stake from 1.8% to 0.8% post-IPO.
Here is the current and post-IPO shareholding summary:
|
Shareholder |
Current Holding (in lakh shares) |
Shares Offered (OFS) |
% Pre-IPO |
% Post-IPO |
|---|---|---|---|---|
|
Tata Sons |
35,750.64 |
2,300.00 |
88.6% |
74.2% |
|
TMF Holdings |
1,862.25 |
0.00 |
4.6% |
— |
|
Tata Investment Corp |
829.37 |
0.00 |
2.1% |
— |
|
International Finance Corp |
716.49 |
358.24 |
1.8% |
0.8% |
|
Total Shares (Lakhs) |
40,349 |
— |
— |
45,107 |
Use of IPO Proceeds
The ₹2,000 crore fresh issue proceeds will be used for:
-
Strengthening the company’s capital base
-
Onward lending
-
General corporate purposes
-
Covering offer-related expenses
This capital infusion is expected to support Tata Capital’s expanding loan book and future business growth.
Capital Infusion Over the Years
Over the past six years, Tata Capital has received a total of ₹6,000 crore in capital infusion from its shareholders. This includes ₹2,000 crore in FY24 and ₹500 crore in FY23. These funds have helped the company scale up its operations across retail and wholesale lending segments.
Regulatory Push Behind IPO
The IPO has been prompted by regulatory compliance. In September 2022, the Reserve Bank of India (RBI) classified Tata Capital as an Upper Layer NBFC, mandating a stock exchange listing within three years. The deadline for this listing ends in September 2025.
Tata Capital’s Business Overview
Tata Capital is the flagship NBFC of the Tata Group and one of the fastest-growing players in the Indian financial services sector. With a strong presence across retail, SME, and corporate lending, it boasts:
-
Total AUM: ₹2.27 lakh crore
-
Branches: 1,496 across India
-
Rank: 3rd largest NBFC in India by loan book
Besides lending, Tata Capital also offers:
-
Wealth management
-
Distribution of third-party financial products
-
Private equity services
Market Position and Growth
Tata Capital’s loan book growth has outpaced several major NBFCs in India. Here's how it stacks up against key peers in terms of CAGR (FY23–FY25) and loan book size:
|
NBFC |
AUM (₹ crore) |
CAGR FY23–25 |
|---|---|---|
|
Bajaj Finance |
4,14,830 |
29.7% |
|
Shriram Finance |
2,59,920 |
19.1% |
|
Tata Capital |
2,26,550 |
37.3% |
|
Chola Investment |
1,85,450 |
31.6% |
|
AB Capital |
1,26,350 |
25.2% |
This high growth is supported by a diversified loan book and wide branch reach.
Bookrunning Lead Managers
Several leading investment banks have been appointed as bookrunning lead managers (BRLMs) for Tata Capital’s IPO, including:
-
Kotak Mahindra Capital
-
BNP Paribas
-
Citigroup Global Markets
The company is yet to announce its price band, but market expectations remain high, considering its growth trajectory and backing by Tata Sons.
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