Tata Sons Listing News: The board of directors of Tata Sons will meet on Thursday to discuss ways to comply with the Reserve Bank of India (RBI) mandatory listing directives. The RBI’s refusal to relax listing rules for Tata Group’s holding company has turned what was meant to be a routine board meeting into a high-stakes discussion on the way forward.
According to stock market experts, after the RBI’s refusal to relax the listing rules for Tata Sons, the Tata Group’s holding company has only three ways out: first, to follow the mandatory listing directives by the RBI; second, to look for a legal review of the RBI’s directives; and third, to go for the business division and reduce the balance sheet of the company.
Tata Sons Listing | Options other than IPO
Speaking on the possible options available at Tata Sons, Arun Kejriwal, Founder at Kejriwal Research and Investment Services, said, “After RBI’s refusal to relax the listing norms for Tata Sons, the company board has three options, out of which seeking legal review of RBI’s directives is the most lucrative. However, I believe the Tata Group’s holding company may think otherwise.”
Anuj Gupta, a SEBI-registered market expert, said that Tata Sons has technically one more option: to reduce the company’s balance sheet through company splits. However, it looks easier said than done. The SEBI-registered expert said that the business unlock would be highly complex, and hence the company may take a practical approach and proceed with the listing, in line with the RBI’s directives.
“Tata Sons and Tata Trusts should work towards an IPO of Tata Sons rather than pursue prolonged litigation or alternative structures aimed at remaining unlisted,” InGovern Research, a proxy advisory, said in a Sept. 16 report. “The RBI has shown that it is tenacious by having filed a caveat in the Bombay High Court.”
Tata Sons News
Tata Sons had sought an exemption from the listing requirement to avoid tighter regulatory scrutiny and expanded public disclosures. A public float would force the holding company to reveal far more about the finances and governance of the group’s sprawling businesses — from steel and autos to software, airlines and consumer goods — and could dilute the influence of Tata Trusts, a group of charities that control the company.
The Tata Group values its current ownership structure, arguing that it allows the business to take a long-term view across its portfolio without public-market pressures. The group, with $185 billion in revenue, controls over two dozen listed companies, and is also key to India’s high-end technology ambitions — having committed to producing the first homegrown semiconductor chips.
The RBI’s public-float mandate aligns with long-standing demands from the debt-laden Shapoorji Pallonji Group, Tata Sons’ biggest minority shareholder, which has been pressing for a listing to unlock value from its 18.4% stake.
Besides giving liquidity to SP Group and other listed Tata companies that hold a stake in Tata Sons, a listing will give capital flexibility to raise funding and “subject the Tata Trusts’ special rights to greater scrutiny,” according to InGovern Research.
(With inputs from Bloomberg)
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