Tata Technologies Ltd, the first Tata Group company to go public in nearly two decades, made a spectacular stock market debut on Thursday with its shares listing with a premium of 140% above its issue price.
Shares of Tata Tech, which counts private equity firm TPG as an investor, began trading at Rs 1,199.95 on the BSE, compared with its initial public offering price of Rs 500 apiece.
The shares touched a high of Rs 1,400 in the first few minutes before paring the gains to close at Rs 1,314.25, giving the company a market value of Rs 53,315 crore ($6.4 billion).
The blockbuster debut comes after the company’s IPO drew a massive response from investors. The IPO was fully subscribed within a couple of hours of the share sale opening for bidding last week. It closed with overall subscription of almost 70 times, with institutional investors bidding for nearly 200 times the shares reserved for them.
Tata Tech is the first Tata Group company to float an IPO since Tata Consultancy Services, India’s biggest IT company, went public in 2004. The IPO comprised an offer for sale of 60.9 million shares by Tata Motors and Tata Capital Growth Fund, one of a clutch of private equity vehicles managed by Tata Group’s financial services flagship Tata Capital Ltd.
Tata Technologies didn't sell any fresh shares. The total size of the IPO was Rs 3,042 crore ($365 million).
Ahead of the IPO, Tata Technologies raised Rs 791 crore by selling 15.8 million shares to a bunch of anchor investors including mutual funds and life insurance companies. Norway’s sovereign wealth fund and funds managed by Oaktree also took part in the anchor round.
Tata Tech reduced the IPO size after Tata Motors last month sold a 9% stake in the company to US private equity firm TPG’s Rise Climate fund for Rs 1,467 crore and a 0.9% stake to Ratan Tata Endowment Foundation for Rs 146.7 crore at a valuation of Rs 16,300 crore, or about $2 billion. TPG bought that stake at a price of Rs 401.81 per share, meaning that the value of its investment has more than tripled in barely a month.
FedFina’s weak debut
Non-bank lender Fedbank Financial Services Ltd, of FedFina, made a tepid debut on Thursday with its shares listing at a discount to the issue price.
Shares of FedFina, which counts private equity firm True North as an investor, began trading at Rs 137.75 on the BSE, compared with its initial public offering price of Rs 140 apiece.
The shares traded between Rs 133.15 and Rs 148 during the day before closing at Rs 140.00, giving the company a market capitalisation of Rs 5,165 crore ($620 million).
FedFina opened its IPO for subscription on Nov. 22 and closed it two days later. The IPO comprised a fresh issue of shares worth Rs 600 crore and a secondary market sale of 35.16 million shares by Federal Bank and True North. The bank sold 5.47 million shares while the PE firm offloaded 29.69 million shares. The IPO was subscribed a little more than two times the shares on offer.
FedFina and True North, one of India’s oldest PE firms, changed their IPO plans a couple of times. Last year, when it first filed its documents, Fedfina proposed to raise Rs 900 crore through fresh shares and its shareholders proposed to sell 45.71 million shares. At the time, True North was looking to sell 29.21 million shares.
The company refiled its draft IPO documents in July this year. As per the revised draft, the fresh issue was worth Rs 750 crore while the offer for sale portion was increased to 70.3 million shares, including 53.8 million shares by the PE firm. True North eventually sold almost the same number of shares that it proposed last year.
The PE firm had invested about Rs 375 crore in Fedfina tranches beginning 2018, with the last tranche coming in 2021. It owned a 25.3% stake in Fedfina before the IPO and pulled out about Rs 416 crore in the partial exit via the IPO.
