Tata Sons is reportedly considering a reduction in its equity stake in Tata Capital, in preparation for a potential IPO.

What Happened: Tata Sons is mulling over the possibility of reducing its equity stake in Tata Capital to less than 50%, according to a report by ET Now. This decision is being considered in light of Tata Capital’s potential IPO, the report added.

The objective is to bolster Tata Sons’ standing as it pursues an exemption from the Reserve Bank of India’s (RBI) mandate for both Tata Sons and Tata Capital to list their shares by September 2025, the report says.

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As per Reserve Bank of India regulations, Tata Sons and Tata Capital are classified as upper-layer NBFCs, forcing them to undergo listing unless granted an exemption.

Tata Sons will likely sell its shares in stages, but the exact timeline for both the stake reduction and the IPO has not been revealed yet. However, an earlier report suggests the IPO might hit the market by the end of this year

The potential IPO of Tata Capital could provide the company with additional capital to fund its growth plans. It could also offer an opportunity for Tata Sons to monetise its investment in the company.

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