Mumbai — India’s Tata Technologies is in talks with Morgan Stanley Investment Management, BlackRock and some US hedge funds to invest in its initial public offering (IPO) at a valuation of $2.5bn, said two informed sources.
Part of conglomerate Tata Group, the company provides engineering services for companies in the automotive and aerospace industries, among other sectors. Its IPO will be the first in two decades for a Tata Group company, which has many listed businesses including in the automotive and steel sectors.
Ahead of its planned $350m-$375m IPO, Tata Technologies is holding talks with US asset managers Ghisallo Capital, Oaktree Capital and Key Square Capital, as well as BlackRock and Morgan Stanley for possible participation in the deal.
Oaktree declined to comment while Tata and the other investors did not respond to requests for comment.
These funds are eyeing Tata’s anchor book, where high-profile institutional investors are allotted shares before the subscription opens for retail and other investors.
“Big investors are quite excited by the Tata brand, and a profitable company with scale ... that’s driving demand,” the first source said.
The talks are assessing Tata Technologies’ valuation to be $2.5bn now, about 25% higher than last month when TPG picked up a 9.9% stake in a pre-IPO fundraising.
Tata’s plan to sell a 14%-15% stake in the IPO is seeing “more investor interest than expected”, the first source said, explaining the quick valuation uptick.
The offer will open for subscriptions around November 21, both sources said, in what could be one of India’s biggest IPOs this year after condom-maker Mankind and Blackstone-owned Nexus Malls. The company hopes the stock will make its trading debut by late November.
For the nine months to end-December, Tata Technologies’ profit rose 23% to 4,074-million rupees ($48.9m) while its total income rose 15% to 30.5-billion rupees, according to draft IPO papers filed with the regulator in March.
Reuters
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