Tokyo/ Mumbai: India’s top vehicle maker Tata Motors Ltd plans to list depository receipts on the Tokyo Stock Exchange, and may raise more than 100 billion yen (Rs3,997 crore) in Japan for acquisitions, The Nikkei daily said on Wednesday.
Tata Motors last week announced a deal to buy luxury brands Jaguar and Land Rover from Ford Motor Co. for about $2.3 billion (Rs9,200 crore). Later this year it plans to start selling the Tata Nano, the world’s cheapest car, at about Rs1 lakh.
A spokesman for Tata Motors said he could not comment on the Nikkei report immediately.
Tata Motors last month signed a deal for a $3 billion one-year bridge loan, which it has indicated it would use for Jaguar and Land Rover deal. It also said it would raise additional long-term funds of up to Rs4,000 crore.
The Nikkei on Wednesday said Tata will list depository receipts on Tokyo’s largest bourse as early as this summer to finance acquisitions, becoming the first overseas firm to do so after restrictions were lifted last year.
A depository receipt is a security backed by a company’s stock. It would allow Tata Motors to access the Japanese capital markets without going through the hassle of a normal listing while allowing Japanese investors to invest in Tata in yen.
Analysts said Tata Motors, listed in Mumbai and New York, may be seeking to tap growing foreign investor appetite for Indian equity, as well as to diversify risk in a time of volatility.
“There is a lot of foreign investor interest in India and Indian companies are able to get a better price outside,” said A.V. Rajwade, an independent currency expert.
“Companies are avoiding New York now because Sarbannes-Oxley has made regulatory requirements strict. Whereas Japan is a major, liquid market and the low interest rates there makes the cost of funds lower.”
The Sarbannes-Oxley Act in the US had made audit measures stricter to protect investors from the possibility of fraudulent accounting activities by companies.
Shares of Tata Motors, which has a market worth of more than $6 billion, rose more than 1.5% to Rs637.80 on Wednesday at the Bombay Stock Exchange, whose benchmark 30-share Sensex index gained 0.8% to 15,750.40.