Tata Sons Ltd. is embarking on a significant share sale initiative, aiming to raise a minimum of $1.1 billion by divesting shares in its software services unit, Tata Consultancy Services Ltd. The terms of the deal, obtained by Bloomberg News, outline an offer to sell 23.4 million shares in Tata Consultancy Services at a floor price of 4,001 rupees ($48.3) per share, representing a discount of 3.7% compared to Monday’s closing price for TCS shares.
This move by Tata Sons contributes to a series of substantial block sales in India, with the most recent being British American Tobacco Plc’s $2.1 billion divestment in its partner ITC Ltd. earlier this month. Favorable market conditions, including a rally in local shares and elevated valuations, have facilitated significant stakeholders in realizing profits by offloading stakes in companies. Concurrently, both domestic and global funds are eager to bolster their ownership positions in Indian firms.
Tata Sons’ offer for sale of a 0.65% stake in Tata Consultancy, the largest information technology firm in India, comes on the heels of Tata Consultancy’s shares reaching record highs last week. Since reaching lows in November, Tata Consultancy shares have appreciated by more than 20%.
The share sale will be managed by Citigroup Inc. and JPMorgan Chase & Co.’s units and is slated to occur on Tuesday, according to the terms. The deal will impose a 180-day lock-up period on the seller.
Tata Sons, the conglomerate’s holding company, which also owns Jaguar Land Rover maker Tata Motors Ltd., has attracted estimates of a valuation as high as 8 trillion rupees in an initial public offering, as suggested by Mumbai-based investment banking firm Spark PWM Pvt. earlier this month.
Post the share sale, Tata Sons will retain a stake of over 71% in Tata Consultancy, solidifying its position as the second-largest Indian firm by market valuation, trailing only Reliance Industries Ltd., according to data compiled by Bloomberg.