Jaguar and Land Rover's IPO seen as jackpot

MUMBAI: When Tata Motors bought Jaguar and Land Rover in 2008 for $2.5 billion from Ford Motor, investors greeted the announcement by selling its stock. Those who held on may be sitting on a jackpot.

The two British luxury car brands are worth $14 billion, according to the average estimate of three analysts surveyed by Bloomberg News, more than Fiat or Suzuki Motor.

With a planned $12 billion in capital spending and product development over five years and a proposed partnership with Chery Automobile to expand in China, conditions are right for an initial share sale, according to Fim Asset Management and Kim Eng Securities.

After acquiring Jaguar and Land Rover from Ford, Tata Motors hired KPMG International and Roland Berger Strategy Consultants to help cut costs at the luxury unit.

The company introduced new models including the new XJ sedan, the Evoque compact SUV and the XF sedan, according to a June 2009 presentation, and began targeting new emerging markets such as Russia and China.

"By listing Jaguar Land Rover, Tata Motors will allow investors who aren't focused on India to invest in the company," said Taina Erajuuri, a Helsinki-based money manager at FIM Asset Management that oversees about $1.2 billion including Tata Motors shares. "The new models planned for JLR require a large amount of investment, especially if the company wants to follow on the success of the Evoque."

Record Sales

Tata Motors, the second-best performing automaker stock globally this year, extended its gains after JLR recorded its highest ever monthly sales in March. That has helped make up for the slowdown in annual deliveries of Tata- branded passenger vehicles in India, where interest rates and fuel prices have dented consumer confidence.