Tata Capital Ltd, a part of the Tata Group, is gearing up for a significant transformation as it sets its sights on going public. The company is planning to restructure its operations and expand its board as it prepares for its debut on the stock market, which is expected in 2025.
According to insider sources, Tata Capital has already taken steps to enhance its board of directors and has initiated mergers involving some of its subsidiary companies, all part of its strategy leading up to the initial public offering (IPO).
This move by the Tata Group is reminiscent of the recent listing of Mukesh Ambani’s Jio Financial Services Ltd, which garnered significant attention in the market.
The timeline for Tata Capital’s IPO can be traced back to a decision made by the Reserve Bank of India (RBI) in September 2022. Both Tata Capital and its parent company, Tata Sons Ltd, were classified as ‘upper-layer’ Non-Banking Financial Companies (NBFCs) by the RBI. This classification mandated that they must go public within three years from the date of categorization. For Tata Capital, this means the IPO must take place by September 2025.
The RBI categorizes NBFCs into different layers: Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL), and Top Layer (NBFC-TL). Under these guidelines, NBFC-ULs are required to adopt an enhanced regulatory framework approved by their boards and must list their shares within three years of this categorization.
This regulatory push by the RBI stems from the need for stricter oversight following the collapse of IL&FS in 2018. As a result, NBFC-ULs are now subject to more rigorous regulatory standards and must maintain greater transparency in their financial operations.
Rajiv Sabharwal, the Managing Director of Tata Capital, has affirmed the company’s commitment to adhering to the RBI’s guidelines and ensuring compliance as they work towards their IPO in 2025.
In summary, Tata Capital is embarking on a journey to restructure its operations, expand its board, and fulfill regulatory requirements as it prepares for its stock market debut in 2025, in line with RBI guidelines for upper-layer NBFCs. This move follows the RBI’s efforts to strengthen oversight in the NBFC sector.