Tata Sons is searching for ways to comply with RBI regulations, therefore an IPO is unlikely to happen anytime soon

Tata Sons is searching for ways to comply with RBI regulations, therefore an IPO is unlikely to happen anytime soon

With relation to higher tier non-banking financial firms (NBFCs), Tata Sons is evaluating several options for adhering to Reserve Bank of India (RBI) directives.

One potential line of action that Tata Sons is considering is demerging Tata Capital in order to guarantee compliance.

As a result of the announcement of Tata Sons' IPO, several of the group's shares increased this week by as much as 36%. Within the BSE500 pack, the four best-performing stocks were from the salt-to-software category.

The parent company of many Tata group enterprises is reportedly exploring other options to comply with Reserve Bank of India (RBI) regulations, making the group's impending IPO seem less probable. As.

Being a 'higher tier' NBFC and a CIC registered with the RBI, Tata Sons is required to adhere to stringent regulations and become a public company within three years of notification. It is necessary to have a market listing.

Tata Sons must list on the markets by September 2025, according to a letter the RBI sent out in September 2023.

The group's eagerly anticipated IPO is doubtful, insiders told CNBC TV-18. In order to assure compliance, Tata Sons is evaluating a number of possibilities, including the potential separation of Tata Capital.

Credit information company (CIC) or 'upper layer' nonbank financial company (NBFC) status is available to 'core investment company's' with assets under Rs 100 crore that do not involve public fund raising. Preventable and not necessary. to proceed with a public list.

These corporations can easily get around the regulations thanks to this exception. The compliance plan also includes an evaluation of the group debt reduction initiatives.

As the company that stands to gain the most from the anticipated Tata Sons IPO, Tata Chemicals would miss out on potential value unlocking if the IPO does not take place. In a previous letter this week, Spark Capital said that Tata Motors, Tata Chemicals, Tata Power, and Indian Hotels are the four Tata group firms that control a portion of Tata Sons.

However, since Tata Chemicals has a 3% ownership position in Tata Sons, it is the only company with a genuine chance to benefit from this potentially value-unlocking opportunity. Spark believed that Tata Sons' market value was around Rs 8 lakh crore, excluding holdco discounts and alternatives.

That computation suggests that the equity share of Tata Chemicals in Tata Sons would be worth Rs 19,850 crore.