Tata Sons preparing for Tata Capital IPO with potential lookout for bankers: Report

India's leading conglomerate Tata Group has started preparations for Tata Capital IPO while trying to avoid listing the holding arm Tata Sons, according to an ET Now report.

According to the RBI's rules, Tata Sons and Tata Capital are treated as upper-layer NBFCs and are required to list shares by September 2025. Tata Sons owns about 95% equity in Tata Capital.

If everything goes well, the IPO might hit the market by the end of this year. Separately, the conglomerate is also considering transferring some of its non-core assets to Tata Capital.

The Tata Group is planning to bring about an IPO to restructure operations and make the company public.

If the plans fructify, this will be the first public offer after Tata Technologies, which drew significant investor interest. The shares of Tata Capital are also seeing hefty demand in the unlisted market and are being traded above Rs 1,100, according to various reports.

Tata Capital is a flagship financial services company of the Tata Group and a subsidiary of Tata Sons, which carries on business as a non-banking financial company.

Tata Capital and its subsidiaries provide a wide array of services in the financial services sector and operate across various areas of business, including commercial finance, consumer loans, wealth services, and distribution and marketing of Tata Cards.

Meanwhile, RBI rules also mandate that Tata Sons is required to list by September this year. But, the conglomerate is ready to repay outstanding borrowings towards seeking exemptions from RBI rules.

Last month, Tata Sons, the holding company of TCS, sold 2.34 crore shares in the subsidiary in a block deal which was said to be worth around Rs 9,000 crore.

The cash could also be used to pare some of the debt of Tata Sons whose FY23 balance sheet shows borrowings of about Rs 20,270 crore. Debt reduction could also help the holding company avoid an IPO.