Tata Sons, the $150 billion parent company of the Tata Group, is considering reorganizing its financial sheet in order to obtain an exemption from the RBI regulation requiring an IPO. The Tata Group must list by September 2025.
A person familiar with the development said that RBI rules state that a "core investment company" can avoid being classified as a CIC or "upper layer" NBFC and avoid having to pursue a public listing if it does not own more than Rs 100 crore in assets and does not raise public funds (if it repays them or transfers them to a separate entity). Tata Sons chose not to respond.
Tata Sons is an upper-layer NBFC, subject to a strict disciplinary framework and a mandated listing within three years of notification. The banking authority has registered Tata Sons as a CIC. In September 2022, the RBI released the notification pertaining to Tata Sons.
The N Chandrasekaran-led business is looking at possibilities to move its debt to a different entity so that it is not included on the 'upper layer' list, the person previously quoted stated, even though it still has time to comply with RBI regulations. Tata Sons' FY23 report states that the company has borrowings of Rs 20,000 crore.
A lawyer claims that a CIC is subject to RBI regulation only under the following two scenarios: Initially, if the CIC's asset value exceeds Rs 100 crore. Secondly, whether public money have been raised. It is not necessary to register as a CIC if one of the requirements is not met.
With assets valued at more than Rs 100 crore, Tata Sons would need to restructure its debt in order to deregister as a CIC with the RBI. It can do this by either repaying its borrowings and becoming debt free or by transferring its debt to a another business.
A projected initial public offering (IPO) of Tata Sons has caused the share prices of four listed Tata Group firms that own a stake in the holding company to soar. Tata Chemicals' stock price increased by almost 15% on the BSE during Thursday's calm trading session, ending with an 11.6% gain at Rs 1,315. The company most likely to gain from a possible Tata Sons IPO is Tata Chemicals.
