MC EXCLUSIVE Tata Capital targets $16.5 bn valuation for its $1.85-bn IPO; early October launch on cards

Tata Sons holds a substantial majority stake in Tata Capital

Tata Group is targeting a post-money equity valuation of around $16.5 billion for the big-bang initial public offering (IPO) of the group's flagship financial services arm Tata Capital which is gearing up for a launch in early October, multiple people aware of the development said.

Tata Capital is a non-banking financial services (NBFC) firm and a subsidiary of the business group's principal investment holding company, Tata Sons.

"Post roadshows and deliberations with stakeholders, Tata Capital's targeted listing valuation is now around $16.5 billion or Rs 146,000 crore," one of the people cited above told Moneycontrol.

According to Reserve Bank norms, upper layer NBFC's like Tata Capital have to mandatorily list on the domestic bourses by September 30, but the firm secured a minor extension from the banking regulator recently, according to reports.

"As of now the plan is for the anchor portion to be on October 3 and the launch for public subscription between October 6 and October 8, following the weekend," a second person added.

These dates are not frozen and may vary due to any unexpected circumstances, this person warned.

"The combined IPO size (fresh issue of shares plus OFS by Tata Sons and IFC or International Finance Corporation) is now pegged around $1.85 billion or Rs 16,400 crore,” a third person told Moneycontrol.

“Insurance giant LIC is likely to make a big bet in this issue,” a fourth person elaborated. The four persons above spoke to Moneycontrol on the condition of anonymity.

An email query to Tata Sons and LIC remained unanswered at the time of publishing this article and reminders have been sent. An immediate comment could not be elicited from Tata Capital. This article will be updated as soon as we hear from the parties.

Tata Sons holds a substantial majority stake in Tata Capital. External investors IFC and other group companies like TMF Holdings Ltd, Tata Investment Corporation, Tata Motors, Tata Chemicals, Tata Power and others hold the balance stake as per the draft documents.

Tata Capital: Road to Dalal Street

On April 5, Moneycontrol was the first to report that Tata Capital had filed draft papers with SEBI via the confidential pre-filing route for an over Rs 15,000 crore IPO.

Earlier on March 21, Moneycontrol was also the first to report that the top NBCF had engaged a bevy of 10 investment banks as advisors for the mega listing and was likely to opt for the confidenttial pre-filing route. Kotak Mahindra Capital, Citi, Axis Capital, JP Morgan, HSBC Securities, ICICI Securities, IIFL Capital, BNP Paribas, SBI Capital and HDFC Bank were engaged, the report had added.

As per the firm's draft documents, following is the use of IPO proceeds - "Augmentation of our company’s Tier – I capital base to meet our company’s future capital requirements including onward lending."

Cyril Amarchand Mangaldas, AZB & Partners and Latham & Watkins are the company counsel, banks counsel and international counsel respectively for the mega issue.

Market conditions have been challenging for NBFC listings in the recent past. According to reports, the likes of TPG backed Jaipur based NBFC SK Finance, Kedaara Capital backed MSME-focused Veritas Finance and education loan financier Avaanse Finance have pressed the pause button on their listing plans since May due a combination of geo-political factors and investor sentiment.

HDB Financial Services has seen a 5 percent uptick in its share price since its market debut on July 2, but has been volatile in the interim period.

The nation's top insurer and largest institutional investor in the stock markets, Life Insurance Corporation of India (LIC) emerged as the biggest anchor investor in the initial public offering (IPO) of HDFC Bank's subsidiary HDB Financial Services. The total amount allocated to LIC in the anchor book portion was around Rs 220 crore, which represents 6.53 percent of the total allocations.

On June 20, Moneycontrol was the first to report that LIC was eyeing participation in the anchor book portion of HDB Financial, an extremely rare bet by the insurance behemoth in the IPO of a private sector firm.

More about Tata Capital: Latest IPO From The Tata Group

Prior to Tata Capital, Tata Technologies made its public market debut in November 2023.
"Since the commencement of our lending operations in 2007, we have served 7 million customers up to March 31, 2025. Our company is categorized as an Upper Layer NBFC by RBI," Tata Capitals' draft document said.

It added, " Through our comprehensive suite of 25+ lending products, we cater to a diverse customer base comprising salaried and self-employed individuals, entrepreneurs, small businesses, small and medium enterprises and corporates. Additionally, we distribute third-party products viz. insurance and credit cards, offer wealth management, and act as sponsor and investment manager to PE funds."

Tata Capital is focused on Retail and SME Customers, with loans to such customers forming 88.5 per cent of it's Total Gross Loans as at March 31, 2025. It has a pan-India distribution network comprising 1,496 branches across 27 States and Union Territories, as at March 31, 2025.

On the financials of the firm, the draft document added, "According to the CRISIL Report, we are the third largest diversified NBFC in India with Total Gross Loans of Rs 2,36,550 crore as at March 31, 2025, among the fastest growing large diversified NBFCs in India based on growth in Total Gross Loans , with Total Gross Loans growing at a CAGR of 37.3 per cent from March 31, 2023 to March 31, 2025."

The Confidential Filing Route

Introduced by Sebi as an alternate for main board issuers in November 2022, pre-filing allows companies to keep sensitive business details or financial metrics and risks under wrap, especially from rivals. On the other hand, in the standard format, the DRHP (draft red herring prospectus) becomes a public document post filing.

This gives issuers the comfort of confidentiality till they arrive at a final decision on the listing, and if required, they can even pull out later depending on market conditions, without disclosing key information.

Over and above, Tata Capital, several other issuers have opted for the confidential pre-filing route like Tata Play, Oyo, Swiggy, Vishal Mega Mart, Credila Financial Services, Indira IVF and PhysicsWallah.