The parent of British luxury carmaker Jaguar Land Rover Automotive Plc has entered into share purchase agreements for the transaction, it said in a regulatory filing on Friday.
TPG Rise Climate, the dedicated climate investing arm of US private equity firm TPG’s $18 billion global impact investing platform, would be the lead investor in the transaction that has valued Tata Technologies at Rs 16,300 crore (about $2 billion).
TPG Rise Climate had earlier invested $1 billion in Tata Passenger Electric Mobility Ltd, which makes electric cars.
Tata Motors said the transaction furthers its “de-leveraging agenda” and is expected to close in the next two weeks on completion of customary closing procedures.
Tata Motors chairman N. Chandrasekaran said at the company’s annual general meeting this August that the aim is to make the domestic business near debt-free this financial year and JLR in the following year.
Post the stake sale, Tata Motors’ holding in TTL will drop to 64.79% from 74.69% currently. Alpha Technologies Pte, Tata Capital Growth Fund I, Tata Motors Finance Zedra Corporate Services, and a public shareholder hold the remaining 25.3% in the company, according to the company’s draft red herring prospectus filed with market regulator Sebi in March.An analyst said Tata Motors will sell 9% stake in TTL to TPG Rise Climate Fund and 0.9% stake to Ratan Tata endowment foundation (0.9%). He said the implied valuation of Tata Motors’ stake in TTL is currently at Rs 12,500 crore. “Applying 20% holding company discount, the value per share stands at INR26/share. This compares with INR22/share in our current SOTP,” the analyst said, requesting anonymity.
The stake sale comes ahead of TTL’s initial public offering (IPO). TTL is an engineering and technology solutions firm which caters to automotive, industrial, heavy machinery and aerospace sectors. Tata Motors filed an addendum with Sebi to its draft red herring prospectus last week.
Tata Technologies would offer 95.7 million shares with a face value of ₹2 apiece in its planned IPO, according to the addendum filed with Sebi. TTL will become the first Tata group company to get listed after nearly 10 years. Tata Consultancy Services, the group’s software services company, got listed in 2004.
The issue, which is an offer for sale (OFS), will see the promoter company and two investors offload a combined 95,708,984 equity shares. Tata Motors will offer up to 81,133,706 equity shares, which is 20% of the pre-offer paid-up equity share capital of TTL. Investors Alpha TC Holdings Pte. and Tata Capital Growth Fund I will sell up to 9.71 million and 4.85 million equity shares, respectively, comprising 2.40% and 1.20% stakes in the company.
TTL has reserved a 10% quota for Tata Motors’ eligible shareholders in the upcoming public issue, it said in the addendum.
TTL has deep domain expertise in the automotive industry and leverages it to serve clients in adjacent industries, such as in aerospace, transportation, and construction heavy machinery.
TPG Rise Climate is the dedicated climate investing arm of TPG’s $18 billion global impact investing platform. The fund focuses on five climate sub-sectors: energy transition, green mobility, sustainable fuels, sustainable molecules, and carbon solutions.