Tata Capital, the financial services arm of the Tata Group, has taken a significant step toward launching one of India’s largest IPOs. The non-banking financial company recently filed updated draft papers with the Securities and Exchange Board of India (Sebi) for an estimated $2 billion public offering. This move could value the company at around $11 billion, marking a major milestone in the financial sector.
The proposed IPO consists of 47.58 crore shares, split between a fresh issue of 21 crore shares and an offer for sale (OFS) of 26.58 crore shares. Under the OFS component, Tata Sons will offload 23 crore shares, while the International Finance Corporation (IFC) will divest 3.58 crore shares. Currently, Tata Sons holds an 88.6% stake in Tata Capital, with IFC owning a 1.8% share.
Proceeds from the IPO are earmarked to strengthen the company’s Tier-1 capital base, supporting future lending activities. The company earlier filed draft papers through the confidential pre-filing route in April and secured Sebi’s preliminary approval in July. Final clearance awaits after the updated draft red herring prospectus (DRHP) is reviewed.
If successful, this IPO will be the largest in India’s financial sector. It also aligns with the Reserve Bank of India’s mandate for upper-layer NBFCs to list within three years of classification. Tata Capital was categorized as an upper-layer NBFC in September 2022, making this move a regulatory compliance step as well as a strategic business decision.
Recent NBFC listings have set a positive benchmark. HDB Financial Services, the non-banking arm of HDFC Bank, went public in June with a Rs 12,500-crore issue, while Bajaj Housing Finance saw a blockbuster debut, closing its first day with a 135% premium. Tata Capital’s strong financial performance adds to investor optimism. For FY25, the company reported a profit after tax of Rs 3,655 crore, up from Rs 3,327 crore the previous year. Revenue also surged to Rs 28,313 crore, a significant jump from Rs 18,175 crore in FY24.
Since launching lending operations in 2007, Tata Capital has served over 7 million customers and offers more than 25 lending products. It caters to a diverse clientele, including salaried professionals, self-employed individuals, SMEs, and large corporates. Beyond lending, Tata Capital also manages third-party financial products like insurance and credit cards, along with wealth management and private equity fund management services.
The IPO is backed by a consortium of top financial institutions, including Axis Capital, Kotak Mahindra Capital Company, HSBC Securities, and JP Morgan India. With strong fundamentals, regulatory tailwinds, and a robust market environment, Tata Capital’s IPO is poised to be a landmark event in India’s financial landscape.