The Tata Group’s finance division, Tata Capital, has announced plans to use debt instruments to raise Rs. 15000 crore ($1.72 billion). The company’s board authorised the fundraising plan earlier this month, and it would involve issuing non-convertible debentures (NCDs) and green bonds.
Fundraising Purpose
Tata Capital, the finance division of the Tata Group, has revealed its intention to raise Rs. 15000 crore ($1.72 billion) through debt instruments. Earlier this month, the company’s board approved the fundraising strategy, which will encompass the issuance of non-convertible debentures (NCDs) and green bonds.
Green Bonds for Sustinable projects
A significant portion of the ₹10,000 crore funding will be raised through green bonds and market-linked NCDs via private placement. Green bonds are specifically intended to finance environmentally friendly projects, including renewable energy, clean transportation, and energy-efficient initiatives.
Additional debt instruments
The remaining ₹5,000 crore will be raised through secured redeemable NCDs, which include a liquidity window facility. These measures, outlined in the company’s filings, are part of a broader strategy to enhance liquidity and ensure financial stability.
Merger of Tata Capital and Tata Motors finance
Last year, the boards of Tata Capital and Tata Motors Finance (TMFL) approved a merger, which has now been sanctioned by the RBI and the lenders of both firms. As a result of this merger, TMF Holdings, an investment
entity owned by Tata Motors, will hold a 4.7% stake in the merged company.
Regulatory compliance and Public listing
As an “upper layer” non-banking financial company (NBFC) regulated by the RBI, Tata Capital is subject to stricter compliance requirements. This classification mandates a public listing by September, a move anticipated to strengthen the company’s capital base and lower its debt burden.
Tata Sons’ shareholding in Tata Capital
Tata Sons, which currently holds a 93% stake in Tata Capital, is expected to reduce its ownership below 75% in the upcoming initial public offering (IPO). The public listing is expected to enhance financial strength and ensure compliance with regulatory requirements.