Tata Sons to sell 1.48% stake in TCS, raise Rs8,500 cr

Tata Sons Ltd, the holding company for India's biggest business group, is selling about $1.25 billion worth of its stake in software services provider Tata Consultancy Ltd, perhaps the group's biggest revenue-earner.

Tata Sons was offering 28.27 million shares of Asia's largest software developer, or about a 1.48 per cent stake, after the market closed on Monday, according to terms for the deal obtained by Bloomberg. The company was planning to sell the shares at Rs2,872-Rs2,925 rupees a share, the terms show.

According to The Times of India, the deal in the biggest block trade this year will be made through the stock exchanges between 13 and 15 March, and will be worth nearly Rs8,500 crore. Tata Sons holds about 74 per cent in TCS.  The selling price range is a 4-6 per cent discount to TCS' Monday closing price of Rs3,052 on the BSE.

The money raised from the stake sale will be used by Tata Sons to strengthen its balance sheet. The plan is to pare the debt in the wireless telecom units Tata Teleservices and Tata Teleservices (Maharashtra) and to shore up equity interests in key Tata group companies.

Tata Group's telecom business has a debt of over Rs40,000 crore as the sale of the consumer wireless unit to Bharti Airtel awaits regulatory approvals. Tata Sons announced the sale of the consumer mobile services business to Airtel in October 2017 and had agreed to take care of the unit's debt obligations. Last week, Tata Sons said that it will buy a 7-per cent stake in group company Indian Hotels for over Rs1,000 crore on or after 13 March, which will increase its stake from 30 per cent to 37 per cent in the hospitality chain.

Tata Sons may buy the stakes from other Tata Group affiliates, which would help to reduce cross-shareholdings, according to the person.

The conglomerate has been planning to raise its ownership over time in five of its largest businesses including Tata Chemicals Ltd. and Tata Steel Ltd, Bloomberg News reported last year. Tata Sons is buying an additional 6.6 per cent stake in Indian Hotels Co. that was held by Tata Trusts, according to a stock exchange filing this month. Last year, it boosted its stake in Tata Motors Ltd, the owner of Jaguar Land Rover.

Citigroup Inc and Morgan Stanley are arranging the offering of Tata Consultancy stock, according to Monday's terms.

The holding company is also seeking a $1.5 billion offshore syndicated loan, as it seeks to pay down expensive debt at its telecommunications unit, people familiar with the matter told Bloomberg last week. Tata Sons plans to use the proceeds to repay debt of units Tata Teleservices and Tata Teleservices Maharashtra, one of the people said at the time.

TCS is also one of the most valued companies in India. In the last few months, the number one and number two slots in terms of market capitalisation has been shifting between TCS and Reliance Industries Ltd. TCS block trade data from the NSE showed that the last such deal by the parent Tata Sons happened in February 2007 when it sold 83 lakh shares of Asia's largest software developer for Rs842 crore.