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Tata Sons seeks to sell stakes in group companies to raise cash

Bombay : Tata Sons, the holding company of the Tata Group, is evaluating options to raise funds from global private equity firms and strategic investors by selling minority stakes as it seeks to strengthen its capital base to finance new ventures. emerging businesses such as e-commerce and clean energy, said two people with direct knowledge of the plans.

The conglomerate is initially looking to raise at least 5,000 crore through sales of potential stakes in group companies, starting with Tata Consumer Products Ltd, Tata Power and Tata Realty and Infrastructure, among others. “The Tata Group will increase the capital through new issues through preferential allocations in various Tata Group companies or the partial sale of the promoter’s stakes in the next six months,” said one of the two people quoted above, under covered with anonymity. “The group is also undertaking an internal assessment to explore potential value creation opportunities in various group companies, the person said.

The two said the proposed fundraising will primarily be used for investments in the group’s ambitious TataNeu super-app venture, a unit of Tata Digital. In a regulatory filing last week, Tata Consumer Products said its board would meet on Tuesday to consider raising funds by issuing preferred shares equivalent to 1.5% of its paid-up share capital to an overseas buyer.

Goldman Sachs and JP Morgan have been commissioned by the conglomerate to seek out potential investors, the sources said, adding that the fundraising is expected to be done in multiple tranches.

A Tata Sons spokesperson declined to comment.

Part of the planned fundraising could be used to reduce the Tata Group’s debt and also meet the working capital needs of the new businesses planned by Tata Sons, including the aeronautics business (Air India), the renewable energy, super app planned business and other digital capabilities being built by the 155-year-old conglomerate.

Tata is looking to further strengthen its e-commerce business, including TataNeu, which has already had a soft launch for Tata Group employees, and is scheduled to officially launch to the general public during the Indian Premier League in Classes.

Raising equity from investors will help bolster the TataNeu initiative and take on well-funded and entrenched rivals in the digital space, the people quoted above said. TataNeu will be pitted against e-commerce ventures Amazon, Walmart-Flipkart and Mukesh Ambani, RIL’s digital properties business hosted under Jio Platforms.

While a large in-house product franchise can give the Tata Group an advantage over its competitors in terms of price and margins, Tata Digital needs to significantly strengthen its back-end logistics and supply chain to compete effectively against competitors.

Tata Sons Chairman N. Chandrasekaran, along with Pratik Pal, CEO of Tata Digital, and Mukesh Bansal, Founder of Myntra and CureFit, jointly lead Tata Sons’ e-commerce ambitions through TataNeu, which aims to consolidate multiple digital entities of Tata into a single digital marketplace and consolidate the estimated 410 million consumers under the group’s multiple digital businesses onto a single platform – a plan somewhat similar to what Reliance has done with its flagship digital business Jio Platforms over the past few years. last two years.

Tata’s super app currently includes BigBasket, 1mg online pharmacy store, Croma and Tata CLiQ, and there are plans to add other products and services including Air Asia flight tickets, hotel, car rentals, restaurant meals, education, remittances and retail. financial products as well, in the coming months.

In line with its e-commerce objectives, Tata Digital has acquired several businesses including Grameen eStore, Urja, BigBasket, 1mg, AccessBell and CureFit, while Croma, Westside and Star Bazaar track both physical and digital sales channels.

Tata’s closest rival RIL has also made a series of acquisitions, including Netmeds, Asteria, Tesseract, business directory platform JustDial, online furniture startup Urban Ladder, logistics Grab A Grub, edtech Embibe, lingerie brand Clovia and fast all-around courier company Dunzo.

RIL’s Jio platforms have raised over $27 billion from more than a dozen global investors, including Meta and Google, to drive its digital plans.

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