Tata Sons eye mega monetisation of assets via stakes sale, IPOs

You may have heard of Tata Sons, but do you know about them? Who exactly owns Tata Sons? And why all of a sudden there is news around them selling stakes via block deals and many Tata IPOs? To know the answers to these questions, continue reading!

About TATA Sons

TATA Sons is the principal holding company of the Tata Group, one of India's largest conglomerates. Founded by Jamsetji Tata in 1868, the Tata Group has interests in diverse sectors such as steel, automobiles, information technology, telecommunications, hospitality, and more. 66% of the equity share capital of Tata Sons is held by philanthropic trusts, which support health, education, livelihood generation, and art and culture.

TATA Sons serves as the promoter of major Tata companies, holding significant ownership stakes in several of them, including Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, and Tata Communications, among others. TATA Sons also plays a crucial role in shaping the group's overall strategy, governance, and vision.

Strategy behind the sale of 9,300 crores of TCS shares

Tata Sons has not disclosed any specific reason for the sale of TCS shares worth Rs 9,300 crore. However, there are a few reasons, as per market experts, which made the holding company trim its stake in the cash cow. Here are some of the reasons:

Fund Raising: The Tata Group plans to enter into a new business area, and they would want cash for it. The group may have sold its stake in TCS for other reasons like debt reduction and fundraising for acquisitions.

Balance Sheet Restructure: The sale of TCS shares may be part of a larger strategy to restructure Tata Sons' balance sheet. They may plan to reduce the

company's debt. Recent reports suggested the group has been exploring ways to avoid being classified as a core investment company (CIC) under RBI regulations.

Confidence Signalling: Another view suggests that Tata Sons might be confident in TCS's future prospects and see this as an opportunity to unlock some value without significantly impacting their controlling stake.

With the sale of shares, Tata Sons holding in TCS from around 72.4% came to approximately 71.75%. There is no significant difference, and they still maintain a comfortable control level. 

There was a short-term impact on the share price, but in the long-term, the impact of such a stake sale is negligible - given the company's fundamentals are strong. It would be interesting to see how the company uses these funds in the future.

Asset summary of TATA Sons

As mentioned earlier, Tata Sons is the principal investment holding company and promoter of Tata Companies, which comprises nearly 100 companies across various sectors. Let us look at the assets of Tata Sons by looking at holding in some companies:

• Tata Sons holds a 71.75% stake in Tata Consultancy Services.
• Tata Sons holds a 73% stake in Tata Investment Corporation consisting of 3.46 crore equity shares. 
• Tata Sons holds a 35.80% stake in Tata Motors.
• Tata Sons holds a 33% stake in Tata Power. 

The details of other holding are as below:

The Monetization Process

Tata Sons' combined value stood at Rs 11.2 lakh crore. Their investment in unlisted companies was Rs 56,646 crore, which includes Rs 7,497 crore in Tata Capital and Rs 18,942 crore in its digital ventures. The company plans to unlock value through two routes:

• Stake sale in existing publicly listed companies. It has already started doing it with the sale of a stake in TCS.
• The company will bring in more IPOs of its unlisted subsidiaries. Tata Play has already made a confidential filing for an IPO with the share market regulator.

Other companies like Tata Capital, Tata AIG, and Tata AIA are also expected to come with their IPOs soon. In the infrastructure sector, Tata may look to divest its stakes in Tata Housing, Tata Realty, and Tata Projects. Their brands like Tata Cliq, Tata 1mg, Big Basket, and Croma, are among the potential candidates.