Tata Capital IPO: Tata Group Likely to Launch ₹15,000 Crore IPO of NBFC Company in 2025
The Tata Group is poised to launch its second IPO in two decades with Tata Capital, its financial services arm, expected to go public in 2025. This move follows the successful listing of Tata Technologies in 2023.
Reasons for the IPO
The IPO is largely driven by the Reserve Bank of India's (RBI) regulations requiring upper-layer non-banking financial companies (NBFCs) to go public by September 2025. Tata Capital falls under this category, and the IPO is a necessary step to comply with the regulations. Additionally, the IPO aims to bolster Tata Capital's capital base and support its expansion plans.
Size of the IPO
Reports indicate that the Tata Capital IPO is likely to raise around $2 billion (approximately ₹15,000 crore). If this holds true, it will be the largest IPO from the Tata Group to date. The IPO is expected to consist of both primary and secondary share offerings.
Tata Capital's Business
Tata Capital is the flagship financial services company of the Tata Group. It operates as a non-banking financial company and provides a wide range of financial products and services. These offerings include commercial finance, consumer loans, wealth services, and distribution and marketing of Tata Cards. The company serves a vast customer base of 5.2 million and has over 900 branches across India.
Financial Performance of Tata Capital
Tata Capital boasts a strong financial track record. For the fiscal year ending March 31, 2024, the company's revenue surged by 34% year-on-year, reaching ₹18,178 crore. Its net profit for the same period was ₹3,315 crore, marking a 12% increase from the previous year. As of October 28, 2024, Tata Capital had a loan book size of ₹1,76,536 crore.
Advisors for the IPO
The Tata Group has appointed Kotak Mahindra Capital as an investment bank and Cyril Amarchand Mangaldas as a legal advisor for the IPO. Additional investment banks are expected to join the advisory team soon.
Anticipation and Impact on the Market
The announcement of the upcoming Tata Capital IPO has created a ripple effect in the market. Shares of Tata Investment Corporation, a holding company within the Tata Group, have witnessed a surge of up to 12% following the news. This positive reaction indicates optimistic market sentiment regarding the IPO.
Conclusion
The Tata Capital IPO is a significant event for both the Tata Group and the Indian financial sector. It underscores the group's commitment to regulatory compliance and strategic growth initiatives. The IPO is expected to generate substantial interest from investors eager to be part of Tata Capital's growth trajectory and the Tata Group's legacy.
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