The initial public offering of Tata Technologies Ltd., a first from the Tata stable in nearly two decades, is set to open for subscription on Nov. 22, albeit smaller than previously planned.
The Nov. 22-24 IPO is a pure offer-for-sale of 60,850,278 shares by parent Tata Motors Ltd. (46,275,000), and investors Alpha TC Holdings Pte Ltd. ( 9,716,853) and Tata Capital Growth Fund I (4,858,425 ), equivalent to 11.41%, 2.40% and 1.20% stake, respectively, according to an exchange filing on Monday. A portion of the offering, about 10%, is reserved for employees of Tata Technologies and shareholders of Tata Motors.
JM Financial Ltd., Citigroup Global Markets India Pvt. and BofA Securities India Ltd. are the book-running lead managers for the issue. The size of the IPO, or its price band, are yet to be disclosed.
To be sure, Tata Technlogies shareholders are offloading less stock than previously planned.
In the draft red-herring prospectus filed with the Securities and Exchange Board of India in March this year, the Pune-based ER&D services firm said Tata Motors, Alpha TC Holdings and Tata Capital Growth Fund I would offload a total 95,708,984 shares equivalent to 20%, 2.40% and 1.20% stake, respectively.
The reduction is due to the fact that Tata Motors has sold 9.9% of its stake in Tata Tech to new investors at an enterprise valuation of Rs 16,300 crore (about $2 billion) ahead of the IPO. TPG Rise Climate SF Pte, a climate-focused private equity fund which had previously invested $1 billion in Tata Motors' electric mobility unit, has bought 9% stake in Tata Technologies while Ratan Tata Endowment Foundation is picking up the rest.
The move is part of Tata Motors' “deleveraging agenda”, the company said on Oct. 13 while announcing the stake sale. As on Sept. 30, the company's net automotive debt reduced to Rs 38,700 crore as against Rs 41,700 crore in the previous quarter.
Tata Motors wants its domestic business to be net debt-free by FY24.
Tata Technologies, a wholly owned subsidiary of Tata Motors, is a global ER&D services firm that offers product development and digital solutions to original equipment manufacturers, not limited to the automotive sector. It counts Jaguar Land Rover Plc and Airbus SE among its clientele. JLR recently expanded its partnership with Tata Technologies for its digital transformation.
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