Tata Sons is set to divest 2.34 crore shares or 0.65 per cent of Tata Consultancy Services (TCS) in the open market at a floor price of Rs 4,001 per share.
The share sale is likely to take place on Tuesday via block deals. The holding company of the Tata group has a 72.38 per cent share in TCS. At the floor price, Tata Sons will raise Rs 9,362 crore.
The shares of the country’s largest IT services firm settled at Rs 4,144.75 on the BSE on Monday.
This will be the second biggest block deal in this calendar year after BAT recently sold ITC shares for Rs 16,690 crore.
The base price is at a discount of nearly 3.50 per cent to the market price.
TCS has a market cap of Rs 14.99 lakh crore making it the second most valued listed company after Reliance Industries Ltd at Rs 19.47 lakh crore
While Tata Sons did not disclose the reasons behind the stake sale, it may be planning to trim debt and avoid an initial public offering (IPO), which is due by September 2025, analysts said.
Tata Sons is a core investment company (CIC) and is among the list of upper-layer non-banking finance companies (NBFC-UL) of the Reserve Bank of India (RBI).
In 2021, the banking regulator segmented NBFCs into four layers as part of a plan to regulate the players in the sector according to their size.
On September 30 2022, the RBI released a list of 16 NBFCs in the top layer, which included Tata Sons and its subsidiary Tata Capital, that required the duo to come out with an IPO by September 2025.
Tata Sons had approached the RBI for an exemption, but the apex bank rejected the request.
Tata Sons is now examining options such as transferring its holding in Tata Capital to another entity in the group or restructuring its debt to become debt-free which will remove the tag of a core investment company (CIC) or NBFC-UL.
The IPO buzz and expectations of value unlocking in some of the firms that hold stakes in Tata Sons had led to a rally in these companies including Tata Chemicals.
However, there was profit booking in the companies after reports surfaced that Tata Sons is not keen on getting itself listed on the bourses.
Spark Capital — an equity market research firm — had valued Tata Sons at Rs 7.8 lakh crore, adding the listing will lead to a simplification of the complicated holding structure of the group.
“There are multiple levers of value available from the unlisted investments as the group is entering into new-age segments such as semiconductors... the group could derive another Rs 1-1.5 lakh crore of value from unlisted investments and step-down subsidiaries,” it said.