Tata Sons, the promoter of Tata Consultancy Services (TCS), is planning to sell a 1.48% stake in the IT behemoth through a block deal to raise nearly $1.2 billion to meet the group’s investment requirements, sources close to the development said on Monday. The funds are expected to be deployed towards repayment of telecom-related debts, simplifying of cross-holdings in group companies by buying stakes, possible acquisitions of assets under insolvency process in the National Company Law Tribunal (NCLT) by Tata Group companies and any other investment requirements that the group envisages. The price at which the shares will be sold is expected to be in the range of Rs 2,870-2,920 per share, which when compared to the closing price of the TCS share on Monday of Rs 3,051.85 implies a price discount of between 4.32% and 5.95%. The block deal could go through in the next few days, sources said. Citibank and Morgan Stanley are learnt to be the advisers on the block deal. Both Citibank and Morgan Stanley did not respond to emails seeking their comments on the subject till the time of going to press. Tata Sons held a 73.52% stake in TCS as on December 31, 2017, according to BSE data. If the deal goes through, the Tata Sons holding in TCS will come down to 72.04%. Tata Sons had last sold TCS shares in a bulk deal on February 6, 2007, at a price of Rs 1,285 a share, raising Rs 886.65 crore, according to Capitaline.
Tata Sons had a standalone net worth of Rs 40,595 crore and debt of Rs 20,839 crore on March 31, 2017. When contacted, Tata Sons and TCS declined to comment on the matter. After taking over as chairman of the $103-billion conglomerate in February 2017, one of the first steps taken by N Chandrasekaran was to strengthen Tata Sons’ control of group companies and to reduce cross-holdings of companies. As part of the process, in the very first board meeting held on February 2017 that he chaired, the board approved a resolution to invest up to Rs 10,000 crore in various Tata group companies. In another move, in June 2017, Tata Sons said it will acquire Tata Steel’s 2.85% stake in Tata Motors. According to experts, there could be more such deals where Tata Sons would buy the stake of their companies in other group companies. In September 2017, Tata Global Beverages and Tata Chemicals were some of the entities where cross-holdings were removed with Tata Sons acquiring the stake. Tata Steel is in the fray to acquire the assets of Bhushan Steel and Bhushan Power & Steel through the insolvency bidding process, which if successful could require resources of nearly Rs 52,000 crore. Tata Steel has already been declared the preferred bidder for Bhushan Steel,