Tata Motors to sell stake in 6 arms
Tata Motors is learnt to have initiated talks with private equity (PE) funds to sell up to 25% stake each in its six profit-making unlisted subsidiaries.
By Dev Chatterjee & Kausik Datta, ET Bureau |
MUMBAI: Tata Motors is learnt to have initiated talks with private equity (PE) funds to sell up to 25% stake each in its six profit-making unlisted subsidiaries. The biggest of the lot is the wholly-owned arm Tata Daewoo Commercial Vehicle Company. Others include HV Excels, HV Transmissions, Tata Motors Finance, Tata Technologies and Telco Construction Equipment (Telcon).
A banker close to the development said the move is part of the company���s plan to raise Rs 3,000 crore through divestment of stakes in its subsidiaries and selling shares in listed firms. Tata Motors is also raising Rs 4,200 crore through a simultaneous, but unlinked rights issue to finance the $2.3-billion acquisition of Jaguar Land Rover (JLR) in June.
���The company feels that it need not hold large holdings in these subsidiaries. Thus, the company will bring them down by 20-25 % in each of them. However, it would like to hold a majority stake in these firms, which are mainly supplying components to it or financing its products,��� the banker added. Another banker said Tata Motors would conclude the stake sale by June 2009.
The company had raised $3-billion bridge loans in June this year. Of this, $2.3 billion has been utilised for the JLR buyout and the rest was spent to meet JLR���s working capital expenditure. Tata Motors will pay back the bridge loans in June 2009.
It is learnt that JLR would return $700 million to Tata Motors and mark the loans on its balance sheet.
When contacted, a Tata Motors spokesperson told ET: ���Tata Motors has already announced, on August 20, 2008, its intention to review the current investment portfolio and pursue a programme of monetising certain investments over the coming quarters.
A banker close to the development said the move is part of the company���s plan to raise Rs 3,000 crore through divestment of stakes in its subsidiaries and selling shares in listed firms. Tata Motors is also raising Rs 4,200 crore through a simultaneous, but unlinked rights issue to finance the $2.3-billion acquisition of Jaguar Land Rover (JLR) in June.
���The company feels that it need not hold large holdings in these subsidiaries. Thus, the company will bring them down by 20-25 % in each of them. However, it would like to hold a majority stake in these firms, which are mainly supplying components to it or financing its products,��� the banker added. Another banker said Tata Motors would conclude the stake sale by June 2009.
The company had raised $3-billion bridge loans in June this year. Of this, $2.3 billion has been utilised for the JLR buyout and the rest was spent to meet JLR���s working capital expenditure. Tata Motors will pay back the bridge loans in June 2009.
It is learnt that JLR would return $700 million to Tata Motors and mark the loans on its balance sheet.
When contacted, a Tata Motors spokesperson told ET: ���Tata Motors has already announced, on August 20, 2008, its intention to review the current investment portfolio and pursue a programme of monetising certain investments over the coming quarters.
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We will be announcing these divestment decisions as and when they are taken up by the company. It would not be possible for us to comment on specific companies or initiatives at this stage.��� Tata Motors has started selling shares in Tata Steel as part of its fund-raising programme. On Thursday, it sold one crore shares worth Rs 485 crore to Tata Sons. Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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