New Delhi: Market regulator Securities and Exchange Board of India (SEBI) gave the stamp of approval to Tata Technologies, a subsidiary of automobile major Tata Motors to raise funds through an initial public offering (IPO).

The IPO is a pure offer for sale (OFS), in which the company is ready to sell up to 9.57 crore equity shares amounting to about 23.60 per cent of the company’s paid-up share capital, as per the Draft Red Herring Prospectus (DRHP) filed in March.

In the OFS, the product engineering firm’s parent company will be discharging 8.11 crore shares, representing a stake of 20 per cent in the firm. Whereas, among other shareholders, Alpha TC Holdings Pte aims to discharge up to 97.16 lakh shares totalling up to 2.40 per cent stake in the firm along with Tata capital growth funds I which will be discharging up to 48.68 lakh equity shares amounting to 1.20 per cent stake in the company.

Tata Technologies IPO benefitting Tata Motors

Earlier Avinash Gorakshar who is the head of Research at Profitmart Securities spoke about how Tata Technologies’ IPO will be benefitting the shareholders of Tata Motors, “Tata Motors Ltd would be a direct beneficiary of Tata Technologies IPO as the auto company is offloading its stake in Tata Technologies that it acquired at ₹7.40 apiece (as mentioned in the DRHP).”

Adding further he said, “As Tata Technologies IPO is completely OFS in nature, net proceeds of the public issue would go to the corpus of Tata Motors instead of Tata Technologies. Hence, the IPO is expected to boost the balance sheet of Tata Motors instead of Tata Technologies. Therefore, market is expecting improvement in the financial of Tata Motors and better quarterly numbers in upcoming quarters.”