Tata Motors (NYSE:TTM) is set to sell a 9.9% stake in Tata Technologies to TPG Rise Climate and Ratan Tata Endowment Foundation for Rs 1,614 crore ($217 million), as part of its de-leveraging strategy, ahead of the latter’s initial public offering (IPO). The announcement was made on Friday.
TPG Rise Climate, a component of an $18 billion global impact investing platform that emphasizes green mobility among other areas, has previously invested in Tata Passenger Electric Mobility. This move marks another significant investment into the Indian automotive sector by the environmentally focused fund.
The upcoming IPO, estimated to be around Rs 3,800-4,000 crore ($510-$537 million), includes an offer for sale by Tata Motors, which currently holds a 74.69% stake in the company. Other sellers include Alpha TC Holdings and Tata Capital Growth. There will also be a quota reserved for Tata Motors’ eligible shareholders.
For the nine-month period ending December 2022, Tata Technologies reported a year-on-year growth in revenue of 15%, with the service segment contributing 88% to this growth. The company has seen a remarkable revenue growth of 26.02% in the last twelve months (LTM2023.Q2). The company also reported a net profit of Rs 407 crore ($55 million) during this period.
Shares of Tata Motors closed at Rs 667.10 ($8.96) on Friday. The decision to offload part of its stake in Tata Technologies comes as the automaker seeks to reduce its debt and streamline its operations. The move is expected to provide a financial boost for the company as it prepares for the upcoming IPO.
Tata Motors’ stock generally trades with low price volatility and has seen a large price uptick over the last six months. Showing a 6-month price total return of 91.69% (Y2023.D286). The company has also been profitable over the last twelve months, reinforcing its strong financial performance. For more insightful tips on Tata Motors.
