Tata Sons IPO: Tata Sons must prepare for a public listing by September 2025 in order to maintain its ‘upper-layer’ NBFC (Non-Banking Financial Company) classification. ‘Upper-layer’ NBCs must list within three years of being informed, per RBI regulations. Tata Sons is one of 15 financial institutions included in the category of “upper-layer” NBFCs that the RBI announced on September 14, 2023. Tata Sons will merge with Tata Capital Financial Services, which the RBI has classed as an “upper-layer” NBFC, so it won’t need to be listed.
For Tata Sons stockholders, including Tata Trust, the IPO listing of Tata Sons would be a blessing in disguise. If this Tata group holding firm decided to list via initial public offering (IPO) by selling 5% of its shares, the estimated value of Tata Sons would be roughly $55,000 crore. This indicates that Tata Sons’ IPO would be one of, if not the largest, public offerings in India.
Tata Sons has options:
Speaking on the RBI’s categorization of Tata Sons as an “upper-layer” NBFC, Saurabh Jain, Vice President of Research at SMC Global Securities, stated, “It’s not that Tata Sons will have to go for an IPO launch and listing within three years of being categorized. They still have the opportunity to reorganize the business. The Tata Group Holding Company may reorganize and remove itself from the RBI’s list of “upper-layer” NBFCs.
The possibilities of an IPO launch and share listing within three years of classification, according to Saurabh Jain, are considerable. Even large IPOs are receiving a favorable response from investors, depending on the group, sector, and outlook of the sector, as there is sufficient liquidity in both the primary and secondary markets.
What the RBI policy states
According to RBI regulations, an ‘upper-layer’ NBFC that is not listed must be listed within three years of being so categorized. The NBFC would be subject to stricter and higher regulatory compliance after being categorized.
The RBI classified 15 NBFCs as ‘upper-layer’ NBFCs on September 14, 2023, including LIC Housing Finance, Bajaj Finance, Shriram Finance, L&T Finance, Piramal Capital & Housing Finance, Indiabulls Housing Finance, Mahindra & Mahindra Financial Services, PNB Housing Finance, Aditya Birla Finance, Muthoot Finance, Bajaj Housing Finance, HDB Financial Services, and Cholamandalam Investment and Finance Company.
