Tata Capital's Landmark $2 Billion IPO Set to Reshape Financial Sector

Tata Capital, a non-banking financial company, is launching a $2 billion IPO. This move follows regulatory demands and aims to bolster the firm's capital. The IPO could become the largest in India's financial sector, reflecting Tata Capital's strong financial performance and strategic growth in recent years.

Non-banking financial entity Tata Capital is gearing up to launch its much-awaited $2 billion Initial Public Offering (IPO), market sources revealed this Sunday. The public issue, anticipated to elevate Tata Capital's market valuation to around $11 billion, is set to kick off in the week starting September 22, with an anticipated market debut by the end of the month.

The IPO will include a fresh issue of 21 crore equity shares and an Offer For Sale (OFS) of 26.58 crore shares, according to its recently updated draft red herring prospectus. Major stakeholders Tata Sons and the International Finance Corporation (IFC) are planning to sell a portion of their stakes, 23 crore and 3.58 crore shares respectively, as part of the OFS. The endeavor aligns with the Reserve Bank of India's mandate for upper-layer NBFCs to go public within three years of classification.

Profits from the IPO are earmarked to fortify Tata Capital's Tier-1 capital, supporting its growth and lending operations. Demonstrating solid performance with a lending portfolio of over Rs 2.26 lakh crore and increasing net profits, Tata Capital is poised for a robust start. With asset quality remaining resilient and gross bad loans stable, alongside a strategic diversification into insurance, credit cards, and private equity management, the company exhibits promising prospects for investors.

(With inputs from agencies.)