Tata Motors announced a merger of Tata Capital and Tata Motors Finance. This merger is approved by the Board of Directors of all three entities. As part of the merger, Tata Capital will issue its equity shares to Tata Motor Finance shareholders. This will result in Tata Motors holding a 4.7% stake in the merged entity.
The merger plan is subject to approval from SEBI, RBI, and NCLT. It will also need approval from all the shareholders and creditors of both the merging entities. The overall process will take about 9 to 12 months to complete.
The Strategic Advantage Of Tata Capital’s Merger with Tata Motors Finance.
- Expanded Customer Base: Tata Capital will reach more customers involved in commercial vehicle (CV) and passenger vehicle (PV) financing. This will expand its customer and market presence.
- Enhanced Product Offerings: Tata Capital can create more customized financial products using insights from Tata Motors Finance.
- Employee Development Opportunities: The merged company can provide more job opportunities and career advancement options for employees.
- Stronger Brand Presence: Integrating with Tata Motors Finance will boost Tata Capital’s brand presence and enhance its reputation.
- Long-term Value Creation: The merger aims to benefit shareholders by growing the business, improving operations, and enhancing customer satisfaction over time.
Tata Motors’ Long-Term Vision
This merger is in line with automaker Tata Motors’ objective of:
- Exiting non-core businesses.
- Focusing its capital spending on emerging technologies and products.
This move aims to streamline operations and enhance focus on areas with higher growth potential.
Overview Of Tata Capital
Tata Capital is a subsidiary of Tata Sons and the financial services arm of the Tata Group. It is a prominent Non-Banking Financial Company (NBFC) in India, overseeing a substantial asset base of Rs 1.6 trillion. The Company provides a wide range of financial products and services across various sectors including retail (individual customers), SMEs (small and medium enterprises), and corporate clients. It includes key subsidiaries like:
- Tata Capital Housing Finance
- Tata Cleantech Capital
- Tata Asset Management
- Tata Capital Financial Services
These subsidiaries collectively offer a diverse array of financial services across various sectors.
Tata Capital Financial Performance
Tata Capital, a prominent player within the Tata Group, is gearing up for its debut on the stock market. They plan to sell up to 5% of shares via Offer for Sale (OFS).
In FY 2023-24, Tata Capital saw impressive growth. The company achieved a revenue of approximately Rs. 13,200 crores showing strong market performance. For the same period, the profit after tax amounted to approximately Rs. 2,492 crores indicating solid operational success as well.
E&Y, ICICI securities, and Wadia Ghandy & Co. are the transaction advisors to Tata Capital. While PWC, Axis Capital, and AZB & Partners are transaction advisors to Tata Motor Finance Ltd.
Invest in Tata Capital before the IPO
Tata Capital has been growing substantially in its operations as well as market performance which is reflected in the tata capital share price . The NBFC is planning for an IPO in 2024 end or 2025. This may be the right time for you to increase your wealth by investing in a trending pre-IPO stock like Tata Capital.
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