Tata Sons IPO: After being classified as ‘upper-layer’ NBFC (Non Banking Financial Company), Tata Sons needs to gear up for its share listing by September 2025. As per the RBI guidelines, it is mandatory for an an ‘upper-layer’ NBC to list within three years of being notified. On 14th September 2023, RBI had notified 15 financial companies in ‘upper-layer’ NBFC category, which includes Tata Sons. In fact, RBI has classified another Tata group company Tata Capital Financial Services in ‘upper-layer’ NBFC but it won’t require listing as it is merging with Tata Sons.
Tata Sons IPO listing would be a blessing in disguise for Tata Sons shareholders including Tata Trust. Estimated to be a ₹11 lakh crore company, if this Tata group holding company decides to list via initial public offering (IPO) by offloading 5 per cent of its shares, Tata Sons IPO size would come around ₹55,000 crore. This means, Tata Sons IPO would be India’s one of the biggest public issues if not the biggest one.
Options for Tata Sons
Speaking on RBI’s classification of Tata Sons as ‘upper-layer’ NBFC, Saurabh Jain, Vice President — Research at SMC Global Securities said, “After this RBI’s classifications, it’s not that Tata Sons will have to go for IPO launch and listing within three years of being classified. They have one more option of company’s reorganisation. The Tata group holding caompany may go for reorganisation and come out of the RBI’s ‘upper-layer’ NBFC list.”
However, Saurabh Jain said that chances of IPO launch and share listing within three years of being classified is high citing, “Depending upon the group, sector and outlook iof sector, even big sized IPOs are getting fair response from investors as there is enough liquidity in both primary and secondary market.”
What RBI guideline says
As per the RBI norms, it is mandatory for a non-listed ‘upper-layer’ NBFC to list within three years of being classified as ‘upper-layer’ NBFC. After being classified, the NBFC would require more stringent and greater regulatory compliance.
See full list of upper layer NBFCs below:
On 14th September 2023, RBI classified 15 NBFCs as ‘upper-layer’ NBFCs that includes LIC Housing Finance, Bajaj Finance, Shriram Finance, L&T Finance, Piramal Capital & Housing Finance, Indiabulls Housing Finance, Mahindra & Mahindra Financial Services, PNB Housing Finance, Aditya Birla Finance, Muthoot Finance, Bajaj Housing Finance, HDB Financial Services and Cholamandalam Investment and Finance Company.
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