Tata Motors to sell 9.9% stake in IPO-bound subsidiary Tata Technologies
Mumbai: Tata Motors Limited (TML) is divesting a 9.9 percent stake in its IPO-bound subsidiary, Tata Technologies (TTL), for Rs 1613.7 crore as part of its strategy to reduce debt.
TTL has been valued at around Rs 16,300 crore or approximately $2 billion. This transaction aligns with TML's debt reduction plan and is anticipated to be finalized in the next two weeks, subject to standard closing procedures.
As of June 2023, Tata Motors' net automotive debt stood at Rs 41,700 crore. Analysts predict TML's net debt will decrease to Rs 23,000 crore by the end of fiscal year 2025.
TPG Rise Climate is the primary investor in this transaction.
TPG, which has previously invested in Tata Motors' electric vehicle venture, will acquire a 9 percent stake in Tata Technologies, while the Ratan Tata Endowment Fund (RTEF) will acquire the remaining 0.9 percent.
TPG Rise Climate had previously invested $1 billion in Tata Passenger Electric Mobility Limited and serves as a strategic partner in TML's electric passenger mobility business in India.
Tata Motors will receive Rs 1,467 crore as consideration for selling its stake to TPG, while RTEF will contribute Rs 146.7 crore. The transaction is scheduled to be completed by October 27, 2023, as stated in a notification to the stock exchanges.
TTL reported a revenue of Rs 4,418 crore, a 25 percent increase, while post-tax profit surged by 63 percent to Rs 708 crore.
An IPO for TTL is anticipated soon, during which Tata Motors, Alpha TC Holdings, and Tata Capital Growth Fund I are expected to divest 23.6 percent of the company's paid-up share capital.
TTL is a global engineering services firm providing product development and digital solutions to international original equipment manufacturers.
It specializes in the automotive industry and extends its expertise to clients in related sectors like aerospace, transportation, and heavy machinery construction.
TPG Rise Climate operates as the dedicated climate investment division within TPG's $18 billion global impact investing platform. The fund concentrates on five climate sub-sectors: energy transition, green mobility, sustainable fuels, sustainable molecules, and carbon solutions.
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