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The International Finance Corporation is set to gain substantial returns from Tata Capital's USD 2 billion (INR 17,000-17,200 crore) IPO by selling 3.58 crore shares from its long-term stake. IFC first invested in Tata Capital's cleantech business in 2011, which has since grown into a major financier with over 500 renewable projects and more than 22,400 MW of capacity supported. With Tata Sons holding nearly 89 per cent, the IPO will include both fresh shares and an offer for sale. Proceeds will be used to build capital and drive lending growth, while fulfilling RBI's listing requirement.
The International Finance Corporation (IFC), a part of the World Bank Group, is preparing to secure strong returns from Tata Capital's upcoming initial public offering, which is expected to raise around USD 2 billion (INR 17,000-17,200 crore). IFC will reduce its stake in the non-banking finance company by selling 3.58 crore shares, according to the updated draft red herring prospectus. Advertisement
The stake sale comes from IFC's early investment in Tata Capital's cleantech business made in 2011, when clean energy projects in India were still largely dependent on subsidies. Over time, Tata Cleantech Capital Ltd (TCCL), which was set up through the IFC partnership, has developed into a major green financier. It has supported more than 500 projects across solar, wind, biomass, small hydro, water treatment, and electric mobility, sanctioning over 22,400 MW of clean energy capacity.
By FY25, the combined cleantech and infrastructure finance loan book under Tata Capital crossed INR 18,000 crore, growing at a compound annual growth rate of nearly 32 per cent over the past two years. Following the merger of TCCL with Tata Capital, IFC now holds about 7.16 crore shares, or close to 1.8 per cent of the parent company, of which it plans to offload nearly half in the IPO.
IFC had entered the investment at an adjusted price of about INR 25 per share, valuing its overall holding at roughly INR 179 crore. Based on the recent rights issue price of INR 343 per share, its stake is worth close to INR 2,458 crore, delivering notional gains of around INR 2,278 crore. This translates into a return of nearly 13 times its original investment, with the potential for further upside as the IPO price is expected to be higher.
In July, Tata Capital raised INR 1,752 crore through a rights issue at INR 343 per share. The upcoming IPO will include a fresh issue of up to 21 crore shares and an offer for sale (OFS) of up to 26.58 crore shares. The OFS will consist of about 23 crore shares from promoter Tata Sons and 3.58 crore shares from IFC.
Tata Sons currently owns about 88.6 per cent of Tata Capital. Proceeds from the fresh issue are planned to be used for augmenting Tier-I capital and supporting the company's lending growth. If successful, this IPO will become the largest public issue in India's financial sector and will be Tata Group's second major listing in recent years, following the public debut of Tata Technologies in November 2023.
The offering is also part of the Reserve Bank of India's mandate requiring "upper-layer" NBFCs to list within three years of being classified. Tata Capital was categorised as an upper-layer NBFC in September 2022, which made a listing necessary within the set timeline.
Source PTI
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