The timeline for Tata Sons’ IPO is approaching, and all eyes are now on the Reserve Bank of India (RBI) to see what stance it will take. Analysts suggest that given the size of Tata Sons, it will take a significant amount of time to prepare the Draft Red Herring Prospectus (DRHP) for the IPO. According to RBI regulations, Tata Sons must be listed in the market by September 2025. If the RBI approval comes now, Tata Sons will still need considerable time to prepare for the IPO launch.
Tata Sons has been classified as a Core Investment Company (CIC) under the RBI’s Scale-Based Regulation (SBR) framework. As the deadline approaches, Tata Sons is reportedly looking for ways to avoid this mandatory listing requirement. It has voluntarily submitted its RBI registration, which has raised questions about the company’s regulatory strategy and caused concerns within the financial community.
How Long Will the Preparation Take?
In 2022, RBI introduced a new set of rules under the SBR framework aimed at ensuring better governance and transparency for large non-banking financial companies (NBFCs). Tata Sons, classified in the “Upper Layer” category, was given three years to achieve public listing, which must be completed by September 2025. Experts believe that preparing for such a large IPO could take at least six to eight months.
Company Trying to Avoid the Requirement
Some reports suggest that Tata Sons has paid off its outstanding debts, which might be part of its strategy to relinquish its RBI registration. If successful, this could free the company from the listing requirement under the SBR framework, eliminating the need for public scrutiny and the transparency standards required for listed companies. Another factor in this debate is the role of Venu Srinivasan, Vice Chairman of Tata Trusts, who holds significant influence in Tata Sons. Srinivasan has been serving on RBI’s Central Board of Directors since June 2022.
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Shapoorji Pallonji Group Supports IPO
According to sources, some shareholders are supporting the listing of Tata Sons. Shapoorji Pallonji Group, which holds an 18.37% stake in Tata Sons and is the second-largest shareholder, strongly backed the IPO during the company’s last Annual General Meeting (AGM). Analysts estimate that even a 5% stake sale could raise over ₹55,000 crore from this IPO.
Other Companies May Follow Suit If Exempted
Analysts argue that if Tata Sons is granted an exemption from listing, it could pave the way for other companies in the SBR “Upper Layer” to follow suit. If this happens, it could affect RBI’s regulatory objectives. Other major NBFCs, including LIC Housing Finance, Bajaj Finance, and L&T Finance, have already taken steps to comply with the listing requirement under the SBR framework, and these companies may also oppose such an exemption.