Tata Technologies Ltd, in an addendum to its draft red herring prospectus ((DRHP), has reserved a portion of its upcoming initial public offering (IPO) for employees and Tata Motors Ltd shareholders. "Our company proposes to make available for allocation a portion of the offer to eligible employees and eligible TML shareholders," Tata Technologies says.
The company’s IPO comprises an offer for sale of up to 95,708,984 equity shares for cash. The offer for sale consists of up to 81,133,706 equity shares by Tata Motors Ltd, up to 9,716,853 equity shares by Alpha TC Holdings Pte Ltd, and up to 4,858,425 equity shares by Tata Capital Growth Fund I, representing up to 20%, 2.40% and 1.20%, respectively, of Tata Technologies’ paid-up share capital.
The offer now includes a reservation of up to 0.50% of the post-offer paid-up equity share capital for eligible employees and 10% of the offer for Tata Motors shareholders.
Tata Technologies had filed a draft document with market regulator Securities and Exchange Board of India (SEBI) to launch an IPO in March 2023. SEBI approved the much-awaited public issue in June 2023.
The public issue by the engineering and product development company will be the first public listing by Tata Group in over 18 years. Tata Consultancy Services (TCS) was the last company to go public in 2004, when Tata Sons sold part of its stake in the IT services firm to list the shares on the domestic stock exchanges.
As per the current shareholding pattern, Tata Motors owns 74.69% stake in Tata Technologies, while Alpha TC Holdings Pte and Tata Capital Growth Fund I hold 7.26% and 3.63%, respectively, in the company.
The Pune-based Tata group company provides services in engineering and design, product lifecycle management, manufacturing, product development, and IT service management to automotive and aerospace original equipment manufacturers and their suppliers. It has over 11,081 employees and 18 delivery centers in the U.S., Europe, India, China, Japan, and Singapore.
Tata Tech mostly relies on the Tata group for business, especially Tata Motors and Jaguar Land Rover, and has reported a net profit of ₹407.47 crore during the nine months ended December 2022 compared to ₹331.36 crore last year. Its revenue stood at ₹3,011.79 crore against ₹2,607.30 crore a year ago. Segment-wise, the service business contributed 88.43% to the revenue in 9M FY23, and 85.88% for FY22 of the total revenue.
In November last year, another Tata group company Tata Play, previously known as Tata Sky, had also filed a draft red herring prospectus with the SEBI under the "confidential pre-filing" to launch its public offer. It is the first company in India to take a "confidential pre-filing" route for its IPO.