Tata Motors (NYSE:TTM) Limited has announced plans to sell a 9.9% stake in its global engineering services firm, Tata Technologies, to TPG Rise Climate SF Pte Ltd and the Ratan Tata Endowment Foundation (RTEF). The deal, taking place on Monday, is valued at Rs. 1,613.7 crore ($214 million) with TPG acquiring a 9% stake and RTEF securing the remaining 0.9%.
This decision comes as part of Tata Group's broader strategy to expand its electric vehicle (EV) operations. Tata Technologies, originally an automotive design unit of Tata Motors, competes with another group firm, Tata Elxsi, and extends its operations into aerospace engineering.
The group also announced its intentions to launch an initial public offering (IPO) for Tata Technologies. This would be the first IPO from the Tata Group in nearly two decades. The company plans to offload up to 9.57 crore shares or 23.6% of its share capital through the IPO. The primary objectives behind the IPO include capitalizing on market opportunities, raising funds for future expansion, and increasing its international market presence.
TPG Rise Climate's investment follows their previous engagement with the Tata Group, having invested in Tata.ev, Tata Motors' EV unit. The recent stake purchase in Tata Technologies was made at a $2 billion valuation.
The forthcoming IPO is also intended to allow an exit for Tata Motors and two other investors while enhancing brand visibility as per filings with the Securities and Exchange Board of India (SEBI). Despite initial plans, the launch of the IPO has been delayed.
Tata Technologies' diverse portfolio includes serving clients from aerospace and heavy machinery sectors while providing product development and digital solutions. The company's comprehensive EV strategy also involves potential infrastructure investment through Tata Power and offering end-to-end EV engineering solutions.
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