Tata Motors announced its decision to sell a 9.9% stake in Tata Technologies to TPG Rise Climate SF Pte. Ltd, a climate-focused private equity fund, and Ratan Tata Endowment Foundation.
Why it matters? This sale values Tata Technologies at ₹16,300 crore. TPG, which previously invested in Tata Motors’ electric vehicle segment, will acquire 9% of Tata Technologies. In contrast, the Ratan Tata Endowment Fund will purchase the remaining 0.9%.
Tata Motors will receive ₹1,467 crore from TPG for its 9% stake, while the Ratan Tata Endowment Fund will contribute ₹146.7 crore for its share. The companies expect to finalize this transaction by October 27, 2023.
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What is Tata Technologies? Tata Technologies, a global engineering services firm, specializes in product development and digital solutions for global original equipment manufacturers. They leverage their automotive expertise to cater to sectors like aerospace, transportation, and heavy machinery.
The company is gearing up for its initial public offering (IPO) – the first from the Tata Group in nearly 20 years. This IPO will involve selling up to 9.57 crore equity shares, or 23.6% of the company’s total shares.
For FY23, Tata Technologies reported a 25% revenue increase, reaching ₹4,418 crore, and a 63% rise in profit after tax, totalling ₹708 crore. Over the past three years, the company’s revenue growth has outpaced competitors like Tata Elxsi and L&T Technologies. With an EBITDA margin of 23.7%, it aligns with industry standards. The company’s return on equity improved from 19.8% in March 2022 to 23.7% in March 2023.
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