Tata Tech stake sale talks on; deal may take longer
Tata Motors has held talks with Singapore’s GIC for the stake sale in Tata Technologies, but there has been no outcome yet of those discussions
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Mumbai: Tata Motors Ltd has resumed looking for potential buyers for some of its stake in subsidiary Tata Technologies Ltd, two people familiar with the development said. A deal, however, may take longer with the top-level change at group holding company Tata Sons, they said.
Tata Motors, the owner of Jaguar Land Rover, had last year decided to sell a stake in the subsidiary, an engineering services outsourcing and product development IT services company based in Singapore. The company has held talks with Singapore sovereign wealth fund GIC, but there has been no outcome yet of those discussions, one of the two people cited above said.
Tata Motors is looking to raise about $400-$500 million from a 40% stake sale, said the second person.
“The Tatas have been trying to sell a stake in Tata Technologies for six-seven months and they ran a process earlier this year, but it did not get anywhere. They are in discussions again with certain financial sponsors (private equity firms) but it is yet to be seen if the change at top leads to a change in strategy,” this person said.
In a surprise move last month, Tata Sons ousted Cyrus P. Mistry as chairman, less than four years after he took the helm, and named his predecessor Ratan Tata interim chairman for four months.
In August 2016, at Tata Motors’s annual general meeting (AGM), Mistry had clarified that the company was open to a part-stake sale in Tata Technologies.
Tata Motors along with its subsidiary holds about 70% stake in Tata Technologies, while some other Tata group companies, including Tata Capital, hold about 15.47%.
A Tata Technologies spokesperson declined comment. Tata group and GIC did not respond to an email seeking comment.
In an April 2015 statement, Tata Motors said it considers Tata Technologies as “strategically important” for its business and that it would not sell a “majority” stake in the company.
In June, The Economic Times reported that the Tata Group could list Tata Technologies with plans to raise Rs1,400 crore through an initial public offering (IPO).
For year ended 31 March, Tata Technologies reported revenue of Rs2,686 crore.
According to its website, Tata Technologies also has offices in the US, India, and the UK. Founded in 1989, it employs 8,000 people and caters mainly to manufacturing clients in the automotive, aerospace and other sectors.