Here is the latest development on the Tata Sons IPO – The two factions of Tata Trusts have reportedly reached a mutual conclusion not to list Tata Sons. According to a report by The Hindu Business Line, both sides are unanimous that an IPO of Tata Sons is not in the interests of either the group or the trusts. The Shapoorji Pallonji (SP) Group, which owns around 18% of Tata Sons, has long been pushing for an IPO.
The report by Hindu Business Line quoted a source aligned with Noel Tata saying, “Why should we bail out the SP Group now? Did they ask us before running up a debt of Rs 50,000 crore? And where has the money gone?”
FInancial Express.com however could not confirm this. It is purely based on the Hindu Business Line report.
According to the report the person denied any influence of family ties on its decisions as Noel Tata is related by marriage to the Shapoorji Pallonji (SP) Group.The general sentiment within the Trusts is that bringing in public shareholders could dilute control and hurt the philanthropic activities of both the Tata Group and the Trusts.
A deep dive into the Tata Sons listing dispute
The Shapoorji Pallonji (SP) Group, a debt-heavy conglomerate, is pushing for the listing as it wants to sell its 18.4% stake in Tata Sons, which is estimated to be worth Rs 1.5–2 lakh crore, given Tata Sons’ notional valuation of around Rs 11 lakh crore.
Earlier in 2022, the Reserve Bank of India’s regulatory framework for upper-layer non-banking financial companies (NBFC-UL) after Tata Sons had to be listed within 3 years. However, in January this year, it surrendered its NBFC certification, thereby becoming a “closely held” entity rather than a listed one. Tata Sons has also reportedly taken steps such as significantly reducing debt and restructuring operations to meet the conditions necessary for de-registration. The entity is currently awaiting the RBI’s approval on its application for de-registration.
Lack of transparency over potential listing
Mehli Mistry faction, who have been reportedly against the listing were reportedly raising the concern of transparency earlier. According to Hindu report a trustee complained that when the issue of a potential IPO for Tata Sons came up at the company’s board, the information was not shared with the Trusts. “We asked but were told that ‘we are not at liberty’ to share with you,” the person was quited thus by Hindu Business Line