Tata IPO: Will Tata Group Launch Mother Of All IPOs In India? Pressure On Tata Sons Mount To List!

Tata IPO: Will Tata Group Launch Mother Of All IPOs In India? Pressure On Tata Sons Mount To List!

Tata IPO: Once again, the buzz revolving around Tata Sons’ initial public offering (IPO) is back to trending, after RBI’s latest list for NBFC-UL. Not just that pressure on Tata Sons to list also intensifies from the Mistry family’s Shapoorji Pallonji (SP) Group, which owns about 18.4% of the Tata holding company, to reportedly seek for the share sale.

Tata Sons IPO buzz has been circulating since 2023, and there was temporary disappointment as well last year when reports said Tata Sons is looking to avoid the IPO. However, the latest development once again brings back the IPO case for this holding company which has stakes in one of the largest Tata Group stocks in India.

If Tata Sons are planning the option of IPO, there were earlier speculations of it being the biggest-ever IPO in the country. How big? That’s a secondary question! Tata Sons currently is reportedly looking at possibilities to get out of the NBFC list.

In the latest development, people with knowledge of the matter told the Economic Times that Tata Sons is understood to be preparing for multiple scenarios, including a possible initial public offering (IPO), to ensure readiness amid growing pressure from 18.4% stakeholder, the Mistry family’s Shapoorji Pallonji (SP) Group, to consider a share sale. Scenario planning encompasses possibilities such as a public listing, partial stake sale, or complete buyout of the minority stake.

However, none of these outcomes are expected immediately, given that there is no consensus on this among stakeholders at Tata Trusts, which holds 66% of Tata Sons. Apart from that, ties between the groups haven’t exactly been warm ever since the ouster of the late Cyrus Mistry as Tata Sons chairman in October 2022, the Economic Times report said.

On January 16, 2025, RBI released the list of NBFCs in the Upper Layer under Scale Based Regulation for NBFCs for the year 2024-25. In the list, Tata Sons was included as a core investment company category under the NBFC. Another Tata company on the list was Tata Capital Limited which was identified as a Non-deposit NBFC-ICC.

Reports of Tata Capital launching Rs 15,000 crore worth of IPO have also taken rounds in January month.

In the case of the conglomerate’s holding company, RBI’s list said, “inclusion of Tata Sons Private Limited in the list of NBFC-UL is without prejudice to the outcome of its application for de-registration, which is under examination.”

The framework categorises NBFCs in Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer (NBFC-TL) and gives the methodology to identify the NBFCs in the Upper Layer as per their asset size and scoring methodology.

Furthermore, in terms of the framework, once an NBFC is classified as NBFC-UL, it shall be subject to enhanced regulatory requirements, at least for five years from its classification in the layer, even in case it does not meet the parametric criteria in the subsequent year/s.

As long as Tata Sons cannot deregister itself as NBFC, the listing criteria of RBI’s NBFCs in the Upper Layer (NBFC-UL) rule will hang on the company. If it does manage to deregister, then it can avoid listing.

Last year, in the early months, a brokerage Spark Capital had stated that years: RBI classified Tata Sons as an upper-layer NBFC last year, which makes it mandatory for the company to list itself on the exchanges by Sep-25. Its research note said, “We believe that this event could likely lead to the simplification of the complicated group holding structure of the Tata Group and enable some of the listed holding companies to liquidate its holding within the giant parent conglomerate.”

Further, Spark Capital highlighted the market value of investment estimates in Tata Sons. As per the brokerage, the market value of Tata Sons’ listed investments is estimated at ~Rs16 lac crore and the book value of the unlisted investments is ~0.6 lac crore. It is worth noting that the market value of the unlisted investments could be much higher(~1-2 lac crore) given the group’s foray into semiconductors and EV batteries.

Last year, there were also reports that if Tata Sons goes public chances are that it would be the biggest-ever IPO in Indian history. Speculation of up to Rs 55,000 crore size for Tata Sons IPO were made.

In India, currently, Hyundai is the largest IPO worth Rs 27,870 crore which debuted last year.

Whether Tata Sons plans to go public or not will be keenly watched.

Tata Sons is the principal investment holding company and promoter of Tata companies. 66% of the equity share capital of Tata Sons is held by philanthropic trusts, which support education, health, livelihood generation, and art and culture.

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Original news source Credit: www.goodreturns.in

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