Tata Capital rights issue at nearly one-third the unlisted price

Tata Capital, which is preparing for an initial public offering (IPO), is set to launch its rights issue tomorrow, July 4, for Rs 343 per share, according to documents related to its fundraising efforts. The company aims to raise $2 billion (approximately Rs 17,200 crore) through this issue, which is priced at 2.75 times lower than its unlisted market share price of Rs 945 as of June 2.

Sources indicate that Tata Capital, the flagship non-banking financial institution of the Tata Group, plans to use the funds raised to streamline its financial statements following its amalgamation with Tata Motors Finance.

The issue documents reviewed by Moneycontrol state that the purpose of the IPO is "to augment the long-term resources of the company for its financing activities and to meet the regulatory ratios prescribed by the Reserve Bank of India. Additionally, the funds raised may be used to invest in subsidiaries, repay debt, and/or redeem preference shares of the company."

It is also reported that the pricing of this issue may have been set low to manage expectations regarding the value of Tata Capital shares in the unlisted market.​