Tata Capital, the financial services arm of the Tata group, announced plans to raise up to ₹36,000 crore through debt instruments. The company’s board has approved the fundraising proposal which will be carried out through a private placement across multiple tranches, pending shareholder approval.
Tata Capital’s move was also a measure of its focus on the balance sheet and towards future growth on financial strength and growth management. Debt instruments, such as non-convertible debentures (NCDs), are expected to form the bedrock of this fundraising exercise, for investors to get good returns and the company has long-term capital.
As industry experts note, the timing of the fundraising coincides with a very good market in which institutional investors are hungry for high quality corporate debt. Tata Capital’s reputation as a trustworthy financial services provider also enhances confidence in the offer.
The funds will most likely be utilized in various areas of work (e.g., retail lending, corporate finance and infrastructure financing). With the credit demand in India growing and the expansion of the economy to the point of becoming a global player, Tata Capital wants to acquire a larger range of credit assets.
This is also in line with the trend of Indian banks to tap debt markets to diversify funding sources. With private placement, Tata Capital will be able to structure the instruments in a way to make the investments affordable to institutional investors.
In summary, Tata Capital’s plan to raise ₹36,000 crore through debt instruments is the first step in the company’s development process. With the company’s shareholders’ approval, it will not only help to shore up the company’s financial position but also cement its place in the financial services industry.
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