Tata Group’s Tata Capital Ltd is planning to restructure its operations and expand its board along with its stock market debut, Livemint reported. According to sources quoted in the report, the board for Tata Capital has been expanded and required mergers are underway for the IPO.
“The Tata group is targeting an IPO for Tata Capital in 2025. The board has been expanded, and mergers of some of the group firms under Tata Capital have been done as a part of the IPO plan,” company sources quoted in the report said.
The conglomerate is reportedly eyeing a listing similar to Mukesh Ambani’s Jio Financial Services Ltd last month.
In September 2022, the Reserve Bank of India (RBI) had classified both Tata Capital and parent Tata Sons Ltd among the 16 ‘upper-layer’ NBFCs, requiring them to go public within three years from the date of the categorisation. In Tata Capital’s case, the deadline is September 2025.
On September 14, the central bank released a list of 15 NBFCs, which had Tata Sons’ and Tata Capital’s names, in the upper-layer category, requiring higher regulatory compliance. The central bank has categorised NBFCs into Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer (NBFC-TL).
Under RBI guidelines, NBFC-ULs have to implement a board-approved policy for adopting the enhanced regulatory framework applicable to them and mandatorily list within three years of this.
The RBI has been tightening the regulatory framework for NBFCs after the collapse of IL&FS in 2018. NBFC-ULs will be subject to a more stringent disciplinary structure and have to be more transparent with their financials.
“We will comply with RBI guidelines,” said Rajiv Sabharwal, the managing director of Tata Capital.
In August, fair trade regulator Competition Commission of India (CCI) approved the merger of Tata Cleantech Capital and Tata Capital Financial Services into Tata Capital Ltd. Tata Capital Financial Services (TCFSL) and Tata Cleantech Capital Ltd are RBI-registered non-deposit accepting non-banking financial companies. Both companies are subsidiaries of Tata Capital Ltd (TCL).
The proposed combination is a merger of Tata Capital Financial Services Ltd (TCFSL) and Tata Cleantech Capital Ltd (TCCL) into Tata Capital Ltd (TCL), CCI said in an official release.
Tata Capital’s board has been also restructured in the run-up to the public issue. Tata group veterans FN Subedar and Aarthi Subramanian are non-executive directors of Tata Capital.
Tata Capital is an RBI-registered non-deposit-accepting core investment company (CIC), which holds investments in its subsidiaries, which are engaged in lending and offering a wide array of services and products in the financial services sector.
Tata Capital’s unlisted shares are available for Rs 425 in the grey market. Going by this, the company’s current value is at about Rs 1.5 lakh crore.
(With agency inputs)