Tata Motors Limited (TML) is selling 9.9 percent stake in its IPO-bound subsidiary Tata Technologies (TTL) for Rs 1613.7 crore as part of its plan to de-leverage. TTL has been valued at Rs 16300 or approximately $2 bn.
This transaction furthers TML’s de-leveraging agenda and is expected to close in the next two weeks on completion of customary closing procedures, the company said. As of June 2023 Tata Motors net automotive debt stood at Rs 41,700 crore. Analysts expect TML net debt to reduce to Rs 23000 crore by end of fiscal 2025.
TPG Rise Climate is the lead investor for this transaction. TPG, which also invested in Tata Motors’ electric vehicle business, will pick up 9 percent in Tata Technologies while Ratan Tata Endowment Fund (RTEF) will buy the rest 0.9 percent. TPG Rise Climate had earlier invested $1 billion in Tata Passenger Electric Mobility Limited and is a strategic partner in TML’s electric passenger mobility business in India.
An amount of Rs 1,467 crore will be received by Tata Motors as consideration for sale of its stake to TPG while RTEF will pay Rs 146.7 crore. Transaction to be completed by October 27, 2023, it added in a notification to the stock exchanges.
TTL posted a revenue of Rs 4,418 crore, up 25 percent, while profit after tax was up 63 percent at Rs 708 crore. TTL IPO is expected soon, that would see the company offloading 23.6 percent of the company’s paid-up share capital, by Tata Motors, Alpha TC Holdings, and Tata Capital Growth Fund I.
TTL is a global engineering services company offering product development and digital solutions to global original equipment manufacturers. It has domain expertise in the automotive industry and leverages this expertise 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.