New Delhi: The International Finance Corporation is set to pocket hefty returns from Tata Capital's upcoming USD 2 billion (Rs 17,000 crore) initial public offering, as the World Bank Group arm looks to trim its stake in the non-banking finance company.
The International Finance Corporation (IFC) will offload 3.58 crore shares in the offering, exiting part of an early bet on Tata Capital's cleantech business made in 2011, according to the updated draft red herring prospectus (DRHP).
Tata Capital is likely to launch its USD 2 billion initial public offering (IPO) in the first half of October after the Reserve Bank of India (RBI) granted an extension to list its shares on bourses, people familiar with the matter said.
Earlier, the non-banking finance company was given time till September 30 to list on stock exchanges.
IFC, the World Bank Group's private sector arm, partnered with Tata Capital in 2011 to set up Tata Cleantech Capital Ltd (TCCL), with the mandate to finance renewable and sustainable infrastructure projects. At the time, clean energy in India was still regarded as a subsidy-reliant sector.
Over the past decade, TCCL has emerged as a key green financier, backing over 500 renewable projects across solar, wind, biomass, small hydro, water treatment, and electric mobility.
Further, the company has sanctioned more than 22,400 MW of clean energy capacity and built one of the most comprehensive cleantech portfolios in the country. By FY25, the cleantech and infrastructure finance loan book had crossed Rs 18,000 crore, growing at a CAGR of nearly 32 per cent over the last two years, draft papers showed.
Following a merger of TCCL with Tata Capital, IFC now holds 7.16 crore shares, or about 1.8 per cent in the parent NBFC. Of this, its plans to offload 3.58 crore shares in the upcoming IPO.
IFC had entered at an adjusted price of around Rs 25 per share, valuing its overall investment at roughly Rs 179 crore. At the rights issue price of Rs 343 per share, this stake is worth nearly Rs 2,458 crore, translating into a notional profit of about Rs 2,278 crore. Delivering nearly 13 times, the investment in Tata Capital has been highly rewarding for IFC.
The potential gains are based on the rights issue valuation. The IPO price is expected to be higher, which could further enhance IFC's returns, people familiar with the matter said.
In July, Tata Capital raised Rs 1,752 crore through a rights issue priced at Rs 343 per share.
The upcoming IPO will comprise a fresh issue of up to 21 crore shares and an offer for sale (OFS) of up to 26.58 crore shares, including 23 crore shares from promoter Tata Sons and 3.58 crore shares from IFC, as per the updated draft papers filed in August.
Promoter Tata Sons owns 88.6 per cent of Tata Capital.
Proceeds from the fresh issue will be deployed to augment Tier-I capital and fuel lending growth.
If successful, the IPO will become the largest public issue in India's financial sector. It will also mark the Tata Group's second public listing in recent years, following the debut of Tata Technologies in November 2023.
The IPO is being undertaken in line with the RBI's listing mandate for upper-layer NBFCs, which requires them to be listed within three years of classification. Tata Capital was designated as an upper-layer NBFC in September 2022.
(Except for the headline, this article has not been edited by FPJ's editorial team and auto-generated from an agency feed.)
