N Chandrasekaran-led diversified conglomerate Tata Group has finalized as many as 10 investment banks for the big-bang Rs 15,000 crore plus initial public offer (IPO) of the group's flagship financial services arm Tata Capital.

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

"Kotak Mahindra Capital, Citi, JP Morgan, Axis Capital, ICICI Securities, HSBC Securities, IIFL Capital, BNP Paribas, SBI Capital and HDFC Bank have been engaged for this big deal," said one of the persons above.

Two other persons confirmed the above list of advisors.

One of them added that Tata Capital was likely to file the draft papers by March end or early April via the confidential pre-filing route.

A fourth person elaborated that the IPO, expected to be a combination of primary and secondary issue of shares, may see promoter Tata Sons and investor IFC paring stake.

All the four persons above spoke to Moneycontrol on the condition of anonymity.

When contacted, Tata Sons declined to comment. An email query to Tata Capital and IFC remained unanswered at the time of publishing this article. The i-banks couldn't be reached for an immediate response. This article will be updated as soon as we hear from the firms.

On December 23, Moneycontrol was the first to report that Tata Capital had initiated work on its IPO to comply with regulatory norms. The report added that the expected issue size is in excess of Rs 15,000 crores and that Kotak Mahindra Capital and law firm Cyril Amarchand Mangaldas had been roped in as early-stage advisors.

As on March 31, 2024, Tata Sons directly owned 92.83 per cent in Tata Capital Limited while the balance stake was held by other Tata Group entities and IFC.

Tata Sons shareholding in Tata Capital is unlikely to fall below 75 per cent in the foreseeable future following Tata Capital's planned public listing, a Fitch report released last month said.

On February 25, the Tata Capital board approved the IPO plan and said it will comprise a fresh issue of up to 230 million shares and an offer for sale of equity shares by its existing shareholders. The IPO is subject to market conditions, and regulatory clearances, the company said.

Tata Capital’s board also cleared a rights issue to raise Rs 1,504 crore prior to the launch of the IPO. Tata Sons will subscribe to the entire portion of the rights issue, the disclosure added.

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.

The move will make Tata Capital, the eight major Indian firm opting for the confidential pre-filing route after Tata Play, Oyo, Swiggy, Vishal Mega Mart, Credila Financial Services, Indira IVF and PhysicsWallah.

Trigger for Tata Capital's Listing

The move by Tata Group is in line with RBI's mandatory requirement for "upper layer" NBFCs to list within three years of being notified i.e September 2025.

Tata Capital Financial Services, which merged with Tata Capital later in January 2024, is on the regulator's list.

Additionally, in June, the Board of Directors of Tata Motors Limited (TML), Tata Capital Limited (TCL) and Tata Motors Finance Ltd (TMFL) approved a merger of TMFL with TCL through an NCLT scheme of arrangement. As consideration for the merger, TCL will issue its equity shares to the shareholders of TMFL resulting in TML effectively holding a 4.7 per cent stake in the merged entity.
Bajaj Housing Finance, another firm in the RBI 'upper layer list' made a scintillating market debut on September 16, hitting the upper circuit, with a premium of 135 percent over the IPO issue price at the end of the trading session. HDB Financial Services has also filed for a Rs 12,500 crore IPO to meet the banking regulator's norms.

Latest IPO From The Tata Group

Tata Capital Limited is registered with the Reserve Bank of India as a systemically important, non-deposit-taking, Core Investment Company. It has a diversified product portfolio with a presence in both the wholesale and retail finance segments.

According to a September report by Crisil Ratings, the firm had an AUM of Rs 158,479 crore as on March 31, 2024 (Rs 119,950 crore as on March 31, 2023, Rs 94,349 crore as on March 31, 2022).

According to the Crisil Ratings report, "Tata Sons has infused capital of Rs 6,097 crore in Tata Capital Limited in the last five fiscals, of which Rs 2,500 crore was infused in fiscal 2019, Rs 1,000 crore in fiscal 2020, Rs 594 crore in fiscal 2023 and Rs 2,003 crore during fiscal 2024, indicating the intent of the group to step up its focus on the lending business."