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Monday, April 15, 2024

Tata Sons considers avoiding an IPO


<p>Tata Sons’ massive IPO is expected to be postponed as the $150 billion salt-to-steel conglomerate’s holding company looks at methods to get an exemption from the present rules governing upper-layer non-banking finance companies (NBFC-UL).</p>
<p><img decoding=”async” class=”alignnone wp-image-494399″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-tata-sons-considers-avoiding-an-ipo-newindianexpress-2024-03-aa006316-393e-4780-94-750×422.jpg” alt=”theindiaprint.com tata sons considers avoiding an ipo newindianexpress 2024 03 aa006316 393e 4780 94″ width=”994″ height=”560″ title=”Tata Sons considers avoiding an IPO 3″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-tata-sons-considers-avoiding-an-ipo-newindianexpress-2024-03-aa006316-393e-4780-94-750×422.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-tata-sons-considers-avoiding-an-ipo-newindianexpress-2024-03-aa006316-393e-4780-94-1024×576.jpg 1024w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-tata-sons-considers-avoiding-an-ipo-newindianexpress-2024-03-aa006316-393e-4780-94-768×432.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-tata-sons-considers-avoiding-an-ipo-newindianexpress-2024-03-aa006316-393e-4780-94-390×220.jpg 390w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-tata-sons-considers-avoiding-an-ipo-newindianexpress-2024-03-aa006316-393e-4780-94.jpg 1200w” sizes=”(max-width: 994px) 100vw, 994px” /></p>
<p>Tata Sons may think about restructuring its debt by paying off its current debt or transferring it to a another company, according to sources. By doing this, it will be relieved of the need to float as a publicly traded company by September 2025. The Reserve Bank of India (RBI) has designated Tata Sons as a non-banking finance company upper layer (NBFC-UL) and has registered the firm as a Core Investment Company (CIC).</p>
<p>Purchasing shares and securities is a CIC’s primary activity. A CIC is required by Reserve Bank of India regulations to maintain at least 90% of its net assets as investments in bonds, debentures, equity shares, preference shares, debt, or loans made to group businesses. At least 60% of their assets should be made up of stock interests. A CIC falls into one of two categories: middle layer or top tier NBFC.</p>
<p>According to the current RBI regulation, a CIC may avoid being categorized as a CIC or a “upper layer” NBFC if its assets are less than Rs 100 crore and it does not raise public money. They are not obligated to pursue a public listing in this instance.</p>
<p>Tata Sons had more than Rs 100 crore in assets as of the end of FY23, yet it owed over Rs 20,000 crore in debt. Its estimated stake in Tata firms that are publicly traded is Rs 16 lakh crore. Tata Sons will now need to decide whether to restructure its debt in order to avoid becoming a CIC and go beyond the three-year statutory listing requirement.</p>
<p>Tata Sons and Tata Capital were categorized as upper-layer NBFCs on the list of NBFCs that the RBI released in September 2022. By current standards, an NBFC-UL must become a</p>
<p>listed business three years after becoming an NBFC-UL. This implies that in order to stay in the top layer category or to avoid being granted an exemption, Tata Sons and Tata Capital will need to conduct an initial public offering (IPO) by September 2025.</p>
<p>Tata Sons has till September 25 to list itself, according to V Prashant Rao, Director and Head Equity Capital Markets, Anand Rathi Investment Banking. The central bank has mandated that Upper Layer NBFCs list within three years of identification.</p>
<p>Although Tata Sons may consider alternative options in addition to an IPO, an IPO undoubtedly unlocks wealth and streamlines the corporate structure. It will be one of the largest in the history of the Indian capital market, regardless of the values, Rao said. If an IPO is planned at all.</p>
<p>Tata Sons, the holding company for NBFCs owned by the Tata group, is valued at an estimated Rs 7.8 lakh crore by equity research firm Spark Capital. About 18.4% of Tata Sons is owned by the Pallonji Mistry group, whilst Tata Trusts owns 66% of the company.</p>
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