SEBI approves Tata Technologies IPO; the first Tata IPO in nearly 20 years

It looks like the first IPO from the Tatas fold is going to fructify after a full 19 years. SEBI gave its stamp of approval for the IPO of Tata Technologies, which is normally given within 2 months of filing the draft red herring prospectus (DRHP). SEBI gives this approval in the form of its observations on the DRHP which is tantamount to the approval from SEBI. This also marks the first IPO from the Tata group in 19 year. The last IPO came from Tatas in 2004 when TCS came out with its IPO. Of course, TCS has been a tremendous outperformer since its listing and people who invested in the TCS IPO have made their capital many times over. Investors do have similar expectations from the Tata Technologies IPO too.

The IPO of Tata Technologies will entirely be an offer for sale (OFS) with no fresh issue component. The IPO will be an offer for sale of up to 95.71 million shares (9.57 crore shares approximately) by promoters and early shareholders of the company. The predominant shareholder of Tata Teta Technologies is Tata Motors Ltd, which holds a 74.69% stake in Tata Technologies was incidentally incubated by Tata Motors as its own unit. Currently, the major shareholders of Tata Technologies are as under: 74.69% Tata Motors, 7.26% Alpha Holdings and Tata Capital Growth Fund 3.63%. The offer for sale of 95.71 million shares will be offered as under: 81.13 million shares by Tata Motors, 9.72 million shares by Alpha Holdings and 4.86 million shares by Tata Capital Growth Fund.

The IPO of Tata Technologies marks a generational shift in the Tata group. In 2004, the IT sector had just been opened up about 4 years back and the IPO of TCS marked the affirmation of the Tata group in the IT space. Over the years, TCS has not only  become the largest Indian IT players in terms of revenues and balance sheet size, but it is also the second largest company in India in terms of market capitalization after Reliance Industries. Tata Technologies marks a generational shift as it shows the focus of the Tata group in higher end IT specs like artificial intelligence, machine learning, cloud technologies, analytics etc, which are considered the future of IT services and solution offerings. The IPO after 19 years from the Tata group is also representative of this generational shift in Indian industry.

The lead managers to the IPO will be JM Financial Ltd, BOFA Securities and Citigroup Global Markets. They will act as the book running lead managers (BRLM) to the issue.