According to a Thursday report, Tata Technologies is in talks with Morgan Stanley Investment Management, Blackrock, and other US hedge funds about investing in its $2.5 billion initial public offering.
The company, which is a subsidiary of the Tata Group, provides engineering services to organizations in the automotive and aerospace industries, among others. Its IPO will be the first for a Tata Group company in two decades, despite the fact that the Tata Group has several listed businesses, including those in the auto and steel sectors.
Tata Technologies is in talks with US asset managers Ghisallo Capital, Oaktree Capital, and Key Square Capital, as well as BlackRock and Morgan Stanley, for probable involvement in its planned $350-375 million IPO, according to Reuters, citing sources.
These funds are interested in Tata's anchor book, in which high-profile institutional investors are assigned shares before retail and other investors can subscribe. "Big investors are quite excited by the Tata brand, and a profitable company with scale ... that's driving demand," a person familiar with the matter told Reuters. According to the discussions, Tata Technologies is currently valued at $2.5 billion (about Rs 20,750 crore), which is around 25% more than last month, when TPG acquired a 9.9% share in a pre-IPO fundraising.
Last month, Tata Motors Ltd (TML) entered into share purchase agreements to sell a 9.9% stake in IPO-bound Tata Technologies Ltd (TTL) to private equity fund TPG Rise Climate SF and an endowment trust owned by Tata Trusts Chairman Ratan Tata for Rs 1,613.7 crore. TPG Rise Climate was the lead investor in this transaction, which valued TTL at Rs 16,300 crore in equity.
The IPO will open for subscriptions around Nov. 21, according to both sources, and it might be one of India's largest IPOs this year, following condom maker Mankind Pharma. The company anticipates that the shares will begin trading in late November.
According to preliminary IPO filings filed with market regulator SEBI, Tata Technologies' profit for the nine months ending December 31, 2022 climbed 23% to Rs 407.4 crore, while its overall income increased 15% to Rs 3,050 crore.
Tata Technologies' initial public offering consists of an offer for sale of up to 95,708,984 equity shares, of which Tata Motors will sell 81,133,706 equity shares, Alpha TC Holdings will sell up to 9,716,853 equity shares, and Tata Capital Growth Fund I will sell up to 4,858,425 equity shares.
Half of the net offer, or 50% of the shares, will be reserved for qualified institutional bidders, with non-institutional investors (NIIs) receiving no more than 15% of the shares. Retail investors will receive approximately 35% of the proceeds from this IPO.
