Tata Sons IPO Speculations Rise Amid Leadership Changes And RBI Mandates
According to a media report, Tata Sons may be required to list its shares by September 2025, as per RBI guidelines.
Speculations surrounding Tata Sons' potential IPO have intensified following the appointment of Noel Tata, half-brother of Ratan Tata, as the new chairman of Tata Trusts. Adding to this is the looming deadline set by the Reserve Bank of India (RBI) that mandates Tata Sons, classified as an Upper Layer Non-banking Financial Company (NBFC), to go public by September 2025 unless it secures a reclassification.
Tata Sons, the holding company of the Tata Group, continues to be at the centre of discussions over a possible IPO, a move that could significantly impact the Indian financial market. As of June 2023, Tata Group, India’s most valuable brand, was valued at USD 28.6 billion.
With the Shapoorji Pallonji (SP) Group holding an 18.5 per cent stake in Tata Sons, there has been a long-standing push by the SP Group to list the company. The listing would unlock the fair market value of SP Group’s shares, a step they are reportedly interested in to manage their debts.
The topic gained momentum during Tata Sons’ annual shareholder meeting on 16 September, 2023. Media reports indicated that shareholders discussed the potential IPO, which has garnered attention since Tata Sons has already repaid debts worth Rs 21,813 crore for FY 2023-24.
In response to RBI’s classification of Tata Sons as an Upper Layer NBFC, which necessitates listing by September 2025, Tata Sons has filed for reclassification as an unregistered Core Investment Company (CIC). If approved, Tata Sons would no longer be required to list on the stock exchange, avoiding the IPO. The RBI has yet to respond to the application.
The RBI’s regulation, issued in October 2021 under the Scale-Based Regulation (SBR) framework, mandates that Upper Layer NBFCs must go public by September 2025. On 14 September, 2023, the RBI named 15 NBFCs in this category, with Tata Sons being one of them. The company’s IPO, if it proceeds, would be one of the most significant in India’s financial history, given Tata Sons' stature and financial clout.
What happens next largely depends on the RBI’s decision regarding Tata Sons’ reclassification. Should the request be denied, Tata Sons will have to expedite its preparations for the IPO, a development closely watched by financial analysts, stakeholders and the broader investment community.
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