Tata Technologies in Talks with U.S. Investment Giants for $2.5 Billion IPO

India's Tata Technologies is currently in discussions with several prominent U.S. investment firms, including Morgan Stanley Investment Management and Blackrock, regarding their participation in the company's upcoming initial public offering (IPO) at a valuation of $2.5 billion, as revealed by two sources familiar with the matter.

As a subsidiary of the esteemed Tata Group, the company specializes in delivering engineering services to a diverse range of sectors, such as the automotive and aerospace industries. This impending IPO marks a significant milestone for the Tata Group, as it will be the first IPO for a Tata Group company in over two decades, joining the ranks of other listed businesses within the automotive and steel sectors.

Tata Technologies has initiated talks with renowned U.S. asset managers, namely Ghisallo Capital, Oaktree Capital, and Key Square Capital, alongside Blackrock and Morgan Stanley, to explore their potential involvement in the IPO process. While Oaktree chose not to comment, Tata and the other investors did not respond to requests for comments.

The attention of these investment funds is currently focused on Tata's "anchor book," a section where prominent institutional investors are allocated shares before the IPO subscription becomes accessible to retail and other investors. According to the sources, these talks have led to a valuation estimation of $2.5 billion for Tata Technologies, signifying a notable 25% increase from last month's evaluation following TPG's acquisition of a 9.9% stake in a pre-IPO fundraising round.

The company's proposal to divest a 14-15% stake in the IPO has garnered "greater investor interest than anticipated," leading to the rapid escalation in valuation, as explained by the first source. Both sources anticipate that the IPO will be open for subscriptions around November 21, positioning it as one of India's most substantial IPOs this year, following the footsteps of notable entities such as condom-maker Mankind and Blackstone-owned Nexus Malls. Tata Technologies is hopeful for its stock to commence trading by late November.

According to the draft IPO papers filed with the regulator in March, Tata Technologies displayed a notable 23% growth in profit to 4,074 million rupees ($48.9 million) for the nine months ending on December 31, 2022. Simultaneously, its total income saw a 15% surge, amounting to 30.5 billion rupees.