Tata Capital, the financial services arm of the Tata Group, has concluded its global investor roadshows for its much-anticipated $2 billion Initial Public Offering (IPO). The Non-Banking Financial Company (NBFC) has set its sights on a market debut by September 30, positioning it to become one of the largest IPOs in recent years.

Global Investor Interest

The company's management team traversed key financial hubs including Hong Kong, Singapore, London, New York, and various Indian cities to drum up investor interest. This extensive roadshow appears to have paid off handsomely, with the company's valuation reaching $18 billion, a significant jump from the $11 billion valuation when it filed confidential IPO papers in April.

IPO Structure and Timing

The IPO is structured to include:

• A fresh issue of up to 21 crore equity shares
• An offer for sale of up to 26.58 crore shares
  • Tata Sons plans to divest up to 23 crore shares
  • International Finance Corporation (IFC) will offer up to 3.58 crore shares

The IPO is scheduled to open in the week beginning September 22.

Current Ownership and Post-IPO Changes

At present:

• Tata Sons holds a commanding 88.6% stake in Tata Capital
• IFC owns a 1.8% share

The IPO is set to alter this ownership structure, potentially broadening the investor base.

Use of Proceeds

Funds raised from the fresh issue are earmarked to bolster Tata Capital's Tier-I capital base, a move aimed at supporting the company's lending growth ambitions.

Regulatory Compliance

The IPO aligns with the Reserve Bank of India's (RBI) mandate requiring upper-layer NBFCs to go public within three years of classification, underscoring the regulatory impetus behind this move.

Strong Financial Performance

Tata Capital's financial metrics paint a picture of robust growth. In the first quarter, the company reported:

The company more than doubled its net profit year-over-year, while also achieving a healthy increase in total income.

As Tata Capital prepares for its market debut, investors and market watchers alike will be keenly observing this significant event in India's financial landscape. The success of this IPO could set a new benchmark for the NBFC sector and potentially influence the broader Indian equity market.

Tata Capital, a prominent player in India's financial services sector, is set to make waves in the stock market with its upcoming Initial Public Offering (IPO). The company is planning to launch a substantial $2 billion IPO in the week commencing September 22, with ambitious targets for both valuation and market debut.

IPO Details

The IPO is structured to offer a total of 47.58 crore shares, comprising:

• 21 crore fresh shares
• 26.58 crore shares through an offer for sale

Key stakeholders participating in the offer for sale include:

• Tata Sons, which will divest 23 crore shares
• International Finance Corporation (IFC), offering 3.58 crore shares

This strategic move will see a shift in the ownership structure of Tata Capital, with Tata Sons and IFC reducing their current holdings of 88.6% and 1.8% respectively.

Valuation and Timing

Tata Capital is aiming for a valuation of $11 billion, showcasing the company's confidence in its market position and growth prospects. The company is targeting a market debut by September 30.

Purpose of the IPO

The primary objective of this IPO is to bolster Tata Capital's Tier-1 capital base, providing a robust foundation for future lending requirements. This move aligns with the Reserve Bank of India's (RBI) mandate, which requires upper-layer Non-Banking Financial Companies (NBFCs) to list within three years of classification. Tata Capital received this designation in September 2022.

Financial Performance

Tata Capital has demonstrated strong financial performance:

The company's asset quality has remained stable, with:

• Gross bad loans at 1.9%
• Net bad loans at 0.8% in FY25

Recent Performance

Tata Capital reported impressive results for Q1 FY26:

• Consolidated net profit more than doubled to ₹1,041 crore, up from ₹472 crore in the same quarter of the previous year

This substantial IPO by Tata Capital is poised to be one of the largest in India's financial services sector, potentially reshaping the landscape of the country's NBFC market.