Mumbai: Tata group is gearing up to unveil several public issues in the next two to three years, after a hiatus marked by just one initial public offering (IPO) in the past two decades. This strategic move by holding company Tata Sons aims to unlock value, fuel future growth and provide exit options for select investors, according to executives familiar with the matter.

Tata Capital, Tata Autocomp Systems, Tata Passenger Electric Mobility, BigBasket, Tata Digital, Tata Electronics, Tata Housing and Tata Batteries are among the list of companies being primed to tap the capital markets, they said. The group has been aggressively looking to scale up in new-age sectors such as digital, retail, semiconductors and electric vehicle batteries, among others.

Tata Sons did not comment.

“The decision to approach the capital markets is always strategic, and not really a plan to rush into an IPO for the sake of it,” said one person cited.

“Many of the businesses seeded over 20 or 25 years ago are now in a growth phase and in shape to be monetised. Also, calculated decisions are being taken by specific companies in discussions with Tata Sons. It will be with a purpose either to offer exit opportunities to existing investors or unlock value. But there are no deadlines; decisions will be well thought out,” said the executive quoted earlier.

Last November, Tata Technologies launched a ₹3,000-crore public issue, marking the first public offering from the conglomerate since India’s largest software services exporter, Tata Consultancy Services (TCS), in 2004.

Tata Tech was an offer-for-sale, through which Tata Motors raised ₹2,314 crore, while Alpha TC Holdings and Tata Capital Growth Fund sold shares worth ₹486 crore and ₹243 crore, respectively. The IPO was oversubscribed 69 times and, upon listing, the share surged 165% above the offer price, resulting in significant value unlocking for investors.

Focus Shift
“Earlier, there was a conscious strategy to focus on overseas growth through acquisitions,” said a former group director. “A shift has happened where the growth is India focused largely. The group is taking bold bets on businesses that can scale up. But I do not see there will be a dramatic rush for IPOs by the group.”

The conglomerate had announced plans in the final quarter of 2022 to invest $90 billion in emerging industries by 2027, including mobile components, semiconductors, electric vehicles, batteries, renewable energy and ecommerce. It’s set to exceed that level, going beyond $120 billion in the coming years, ET reported February 29.

Tata Sons’ FY23 annual report stated that the group has invested in new and existing businesses based on requirements for capital, growth and deleveraging balance sheets. Tata Sons got a dividend of ₹33,252 crore in FY23. The holdco recently sold 0.6% of TCS shares to raise around ₹9,400 crore.

Earlier this month, Tata Motors announced the demerger of its commercial and passenger vehicle divisions into separate entities. The two businesses will operate as distinct, separately listed entities.

Analysts noted that the advantage of having a separate listed commercial vehicles entity is that it can access capital markets more efficiently.

On the List
The conglomerate is reportedly considering the listing of financial arm Tata Capital next year to comply with Reserve Bank of India (RBI) norms. In September 2022, RBI categorized both Tata Capital and parent Tata Sons as being in the ‘upper layer’ of non-banking finance companies (NBFCs), mandating them to go public within three years from the date of the classification.