Tata Motors' arm,?Tata Technologies, filed the draft prospectus with market regulator SEBI on March 10th to initiate an initial public offering (IPO) and raise funds.??
The IPO consists of a pure offer for sale (OFS) of up to 95.71 million shares, with Tata Motors offering up to 81.13 million shares, Alpha TC Holdings Pte offering up to 9.72 million shares, and Tata Capital Growth Fund I offering up to 4.86 million shares.
Currently, Tata Motors holds a 74.69 percent stake in the company, while Alpha TC Holdings Pte and Tata Capital Growth Fund I hold 7.26 percent and 3.63 percent stakes, respectively.
According to a TOI report, the company's shares are proposed to be listed on both the NSE and the BSE.?
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By selling its equity stake in Tata Technologies, Tata Motors will be able to improve its finances and reduce its debt, as per the report. Tata Motors has cumulatively invested Rs 224.1 crore in Tata Technologies.?
Tata Motors has struggled over the years due to losses at its Jaguar Land Rover (JLR) unit and the poor financial performance of its domestic business. The company has reported a net loss in the last four consecutive years since 2018¨C19.
After 19 years, this is likely to be the first Tata Group company to go public in India since Tata Consultancy Services in 2004.?Also, Tata Technologies is the 15th-largest IT company in the Fortune India Infotech Industry ranking.
Tata Play (formerly Tata Sky) is also in line to go for IPO this year.
Tata Technologies recently announced a slew of corporate actions. They were recently divided in a 1:5 ratio.Each share of Tata Technologies, with a face value of Rs 10, was divided into five shares of Rs 2. The company subsequently announced a bonus issue in a 1:1 ratio. Effectively, each share of the company was turned into 10 shares.
JM Financial, Citigroup Global Markets India, and BofA Securities India are the book-running lead managers to the issue, whereas Link Intime India has been appointed as the registrar to the issue, as per the TOI report.
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Company details
Tata Technologies Limited (TTL) is a global product engineering and digital services company founded in 1989. It focuses on fulfilling its mission of helping the world drive, fly, build, and farm by enabling global OEMs and their ecosystem of partners across the automotive, industrial machinery, aerospace, and adjacent verticals to engineer, manufacture, and realise better products, as well as helping them drive efficiencies in their businesses.
Tata Technologies has over?7,900 employees with major offices in 17 countries?and over 5,000 clients. As per its website, it?was initially founded as a business unit of?Tata Motors, but in 1994 it spun off as an independent business unit, headquartered in Singapore. And it later began commencing operations in India in 1996.
IPO issue details
The issue is completely an offer for sale (OFS), under which shareholders will offload up to 9.57 crore equity shares, representing 23.60% of its paid-up share capital. The size of the IPO wasn¡¯t disclosed. Tata Technologies' recent buyback valued the company at Rs 16,080 crore. Experts calculated that the size of the offer could be Rs 3,800 crore.
Objectives of the OFS
The company will not receive any proceeds from the OFS from the selling shareholders. Each of them will be entitled to the respective proportion of the proceeds of the IPO after deducting their portion of the offer related expenses and the relevant taxes thereon.
Selling shareholders
Tata Technologies' parent company, Tata Motors, will offload 8.11 crore shares, or a 20% stake in the company. Alpha TC Holdings Pte plans to sell up to 97.16 lakh shares (2.40%), and Tata Capital Growth Fund Inc. would offload up to 48.58 lakh equity shares (1.20%).
Offer structure
50% of the offer is reserved for qualified institutional buyers (QIBs), 35% of the issue is reserved for retail investors, and 15% is reserved for non-institutional investors.
Tata Technologies has a paid-up share capital of Rs 811.83 crore and an authorised share capital of Rs 350 crore, as per the report.
Company's Financials
In the nine months (of current financial year) ended Dec. 31, 2022, Tata Technologies' revenue rose 15.30% to Rs 3,052.95 crore, even as net profit increased 22.82% year-on-year to Rs 407.46 crore, according to the DRHP.
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