Tata Sons Looks To Raise $1.1 Billion Through TCS Share Sale

Tata Sons Pvt. is looking to sell 2.34 crore shares of Tata Consultancy Services Ltd., according to two persons with knowledge of the matter.

The sale will likely happen at Rs 4,001 per share, the people quoted above said on the condition of anonymity.

The sale is being managed by Citigroup and JPMorgan. Through this sale, Tata Sons will raise approximately Rs 9,362 crore or $1.13 billion.

The shares on sale represent a 0.65% stake in TCS, according to last available stock exchange data. Promoter Tata Sons owns 72.38% in the tech major as of Dec. 31, 2023.

According to a financial sector expert who spoke on the condition of anonymity, Tata Sons is likely to use the funds raised through the sale to repay existing debt on its balance sheet.

It is likely that Tata Sons will need to perform a rejig of its corporate structure, which may involve transferring all financial services entities into another holding company.

These two steps will aid Tata Sons in avoiding a mandatory listing under Reserve Bank of India's non-banking financial company guidelines. In September 2022, the banking regulator released a list of upper layer NBFCs, which were required to list within three years. Tata Sons was classified as a core investment company in that list.

According to RBI requirements, Tata Sons would have had to list by September 2025. Tata Sons has been looking at ways to avoid such mandatory listing, the person quoted above said. In 2017, Tata Sons converted itself to a privately held company from a public one, after N Chandrasekaran took over as chairman.

In December, TCS concluded a share buyback programme worth Rs 17,000 crore, at a price of Rs 4,150 per share.

According to a Dec. 4 note by Crisil, the market capitalisation of all of Tata Sons' holdings is at Rs 13 lakh crore, of which TCS accounted for 70%.

For the financial year ended March 31, 2023, Tata Sons had revenue worth Rs 35,058 crore, up 45% year-on-year. Profit after tax stood at Rs 22,132 crore, up 29% from a year ago. Adjusted debt to adjusted net worth stood at 0.2 times, as compared with 0.5 times in FY22. Interest coverage was at 15.6 times, as compared with 9.8 times before.

On Monday, shares of TCS closed at Rs 4,144.75, down 1.72%.

Queries mailed to Tata Sons, JPMorgan and Citi were not immediately responded to.