Tata Sons seeks IPO waiver from RBI after cutting debt

MUMBAI: A month after raising over Rs 9,000 crore from TCS stake sale, Tata Sons has approached RBI seeking an exemption from a mandatory IPO. The holding company of the $150-billion salt-to-software Tata Group has informed RBI, in the fresh proposal, that it has reduced its debt significantly.
Tata Sons needs to cut its debt entirely to cease to be listed as an 'upper layer' NBFC to avoid a listing under RBI rules.According to Tata Sons' FY23 report, it has debt of Rs 21,909 crore and cash & bank balances of Rs 451 crore on its books. The debt figures have improved significantly in the last 12 months.
Last month, Tata Sons raised about Rs 9,362 crore ($1.1 billion) from selling the shares of its cash cow unit TCS and used the proceeds to pay off loans to foreign and domestic lenders.
Tata Sons declined to comment, while RBI didn't respond to TOI's emailed query till the time of going to press.
RBI rules require Tata Sons, which is registered as a core investment company (CIC) with the banking regulator, to be listed by Sept 2025. But the company, controlled by a group of public foundations, Tata Trusts, has been exploring options to avoid the IPO.
According to RBI, for the CIC status, a firm has to meet two conditions: First, it has to have an asset size of more than Rs 100 crore, and second, it has to have public funds. If either of the two conditions fail, then it cannot continue to be registered as a CIC with the regulator.
Tata Sons' assets are mainly its investments in operating companies like TCS, Tata Motors and Tata Steel, and they are worth more than Rs 100 crore. According to its FY23 report, the book value of its investments was Rs 1.3 lakh crore. So, Tata Sons is looking to retire borrowings by becoming debt free, which will enable it to deregister as a CIC from RBI.
The move will help Tata Sons to 'neatly sidestep' RBI's rules, freeing itself from being considered as a CIC and an 'upper layer' NBFC, exempting it from going for an IPO, TOI had reported in its March 8 edition. In 2017, Tata Sons had converted itself to a privately held company from a public one amid a board battle between then chairman Cyrus Mistry and Tata Trusts. Even as Tata Sons looks to avoid the IPO, its subsidiary Tata Capital Financial Services is gearing up for an RBI-mandated IPO.