Tata Capital's IPO Anchor Book Secures Rs 4,642 Crore Amid Strong Investor Demand

Tata Capital, a non-banking financial company, recently raised Rs 4,642 crore from 68 institutional investors. This was achieved through an anchor book that saw demand nearly five times the allocated amount. The funds were collected just days before its Rs 15,512 crore initial public offering (IPO) opens for subscription. The IPO is scheduled from October 6 to October 8, with shares priced between Rs 310 and Rs 326 each.

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The anchor round attracted significant interest from both domestic and international investors. Participants included the Life Insurance Corporation of India, ICICI Prudential Mutual Fund, Nippon India Mutual Fund, Motilal Oswal Mutual Fund, Amansa Holdings, Nomura, Morgan Stanley, Government Pension Fund Global, and Goldman Sachs. Tata Capital allocated 14.24 crore equity shares to these anchor investors at Rs 326 per share.

IPO Details and Stakeholders

The IPO will comprise a total of 47.58 crore shares. This includes a fresh issue of 21 crore equity shares and an offer for sale (OFS) of 26.58 crore shares. Under the OFS component, Tata Sons plans to sell 23 crore shares while the International Finance Corporation (IFC) will divest 3.58 crore shares. Currently, Tata Sons holds an 88.6% stake in Tata Capital, whereas IFC owns a 1.8% stake.

Proceeds from the IPO are intended to bolster Tata Capital's Tier-1 capital base. This will support future capital needs, including onward lending activities. The company aims to strengthen its financial position through this public offering.

Financial Performance and Market Debut

For the fiscal year 2024-25, Tata Capital reported a profit after tax of Rs 3,655 crore, up from Rs 3,327 crore in FY24. Revenue also increased significantly to Rs 28,313 crore in FY25 from Rs 18,175 crore in the previous year. The company is expected to make its stock market debut on October 13.

Tata Capital has been serving over seven million customers since it began lending operations in 2007. Its diverse portfolio includes more than 25 lending products catering to salaried individuals, self-employed professionals, entrepreneurs, small businesses, SMEs, and corporates.

Regulatory Compliance and Future Prospects

This IPO aligns with the Reserve Bank of India's mandate for upper-layer NBFCs to be listed within three years of classification. Tata Capital was classified as an upper-layer NBFC in September 2022. The company filed draft papers confidentially in April and received approval from SEBI in July.

Apart from lending services, Tata Capital distributes third-party products like insurance and credit cards. It also offers wealth management services and acts as a sponsor and investment manager for private equity funds.

The diversity of investors in Tata Capital's anchor round highlights its broad appeal across domestic mutual funds, sovereign funds, insurers, and foreign portfolio investors (FPIs). Despite strong demand for shares during this round, many investors had to settle for smaller stakes than desired.

With inputs from PTI