After the successful listing of Tata Technologies, the Tata Group is gearing up for a major IPO of its financial services arm, Tata Capital, in 2025. This move aligns with the Reserve Bank of India’s (RBI) mandate for “upper layer” Non-Banking Financial Companies (NBFCs) to go public within a stipulated timeline.
Tata Capital Prepares for Public Listing
Tata Capital, leading NBFC and the financial services arm of Tata Sons, has started ‘preliminary’ preparations for an initial share sale, three people in the know said. Though the exact quantum of the IPO is still to be decided, there are talks it could be in excess of ₹15,000 crore-plus issue, thus making it a marque deal.
The conglomerate has roped in Cyril Amarchand Mangaldas as its legal advisor and Kotak Mahindra Capital as the lead investment banker. More investment banks will be hired through pitches to handle the IPO process shortly.
The listing is part of compliance with the RBI’s Scale-Based Regulation framework, which came out in 2022. Tata Capital fell into the “upper layer” classification of NBFC, requiring it to list publicly by September 2025.
Broadly, the RBI classifies NBFCs in Base, Middle, Upper, and Top Layers, depending on factors such as asset size, risk, and governance standards. It moved into the upper layer after the merger of Tata Capital with Tata Capital Financial Services in January 2024.
The IPO is likely to be a mix of primary issue and secondary share sale, providing Tata Capital with an opportunity to raise fresh funds and enabling the existing stakeholders to offload their shares partially. This will also help in enhancing the market presence of Tata Capital and its financial flexibility. In June 2024, Tata Capital underwent a major restructuring and was merged with Tata Motors Finance Limited. Following the deal, Tata Motors Limited now owns 4.7 percent of the combined entity.
Market Trends and Expectations
The IPO market for NBFCs has seen robust activity, with Bajaj Housing Finance making a remarkable debut earlier this year, listing at a 135 percent premium. Analysts anticipate that Tata Capital’s IPO will attract significant interest from investors, given the Tata Group’s reputation and the NBFC’s strong financial performance.
This listing will further cement the Tata Group’s position as a diversified business leader and provide investors with an opportunity to participate in the financial services sector’s growth story.
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Source: Moneycontrol
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