In the morning trade on the BSE on Tuesday, December 24, several Tata Group stocks, including Tata Investment Corporation, Tata Technologies, and Tata Motors, saw notable increases due to rumours that the group is getting closer to launching the initial public offer (IPO) of its financial services division, Tata Capital.
While Tata Technologies’ shares increased 4%, those of Tata Investment Corporation surged up to 12%. The session also saw increases in the shares of Tata Chemicals (up 3%), Tata Motors (up 2%), and TCS (up 1%).
A Moneycontrol story claims that the Tata Group is discussing the launch of the Tata Capital IPO next year with advisors.
“Work has begun on the proposed initial public offer. This is to comply with RBI’s norms for ‘upper layer’ NBFCs. No final call has been taken on the quantum, but the deal is expected to be a big-bang one over 鈧�15,000 crore,” Moneycontrol quoted a source saying.
According to a second source who spoke to Moneycontrol, the group has enlisted the help of investment bank Kotak Mahindra Capital and legal firm Cyril Amarchand Mangaldas as advisors.
Mint was unable to independently confirm this story until it was initially published on December 24 at approximately 10:20 AM.
Move in line with the RBI mandate
In order to comply with the Reserve Bank of India’s (RBI) regulation that “upper-layer” NBFCs list within three years of being notified, the Tata Group may be looking into options to launch the Tata Capital IPO.
A redesigned scale-based regulatory framework for non-banking financial organizations (NBFCs) was introduced by the RBI in October 2021, and it went into effect on October 1, 2022.
Based on their size, activity, and perceived level of risk, NBFCs are categorized into four tiers under the regulatory system for NBFCs.
NBFCs are referred to as NBFC鈥擝ase Layer (NBFC-BL) at the lowest layer and NBFC鈥擬iddle Layer (NBFC-ML) and NBFC鈥擴pper Layer (NBFC-UL) in the middle and upper layers, respectively.
The RBI published a list of 16 upper-layer non-banking financing firms (NBFC-ULs) in September 2022: Cholamandalam Investment and Finance Co., Shanghvi Finance Pvt. Ltd., Muthoot Finance, PNB Housing Finance, Bajaj Finance, Aditya Birla Finance, HDB Financial Services, Shriram Transport, Tata Sons, L&T Finance, Indiabulls Housing Finance, Piramal Capital & Housing Finance, LIC Housing Finance, Bajaj Finance, and Mahindra & Mahindra Financial Services.
Tata Capital, a subsidiary of Tata Sons, must adhere to the RBI’s directive of mandatory listing by September 2025.
