India’s Tata Technologies in talks with Morgan Stanley, US funds for IPO investment -sources

By M. Sriram

MUMBAI (Reuters) -India’s Tata Technologies is in talks with Morgan Stanley Investment Management, Blackrock and some U.S hedge funds to invest in its initial public offering at a valuation of $2.5 billion, two sources with direct knowledge of the matter said.

Part of conglomerate Tata Group, the company provides engineering services for companies in the auto and aerospace sectors among others. Its IPO will be the first in two decades for a Tata Group company, which has many listed businesses including in the auto and steel sectors.

Ahead of its planned $350-375 million IPO, Tata Technologies is holding talks with U.S asset managers Ghisallo Capital, Oaktree Capital and Key Square Capital, as well as Blackrock and Morgan Stanley for possible participation in the deal.

Oaktree declined to comment while Tata and the other investors did not respond to requests for comment.

These funds are eyeing Tata’s so called anchor book, where high-profile institutional investors are allotted shares before the subscription opens for retail and other investors. Reuters is the first to report these investor talks and the valuation.

“Big investors are quite excited by the Tata brand, and a profitable company with scale … that’s driving demand,” the first source said.

The talks are assessing Tata Technologies’ valuation to be $2.5 billion now, around 25% higher than last month when TPG picked up a 9.9% stake in a pre-IPO fundraising.

Tata’s plan to sell a 14-15% stake in the IPO is seeing “more investor interest than expected”, the first source said, explaining the quick valuation uptick.

The offer will open for subscriptions around Nov. 21, both sources said, in what could be one of India’s biggest IPOs this year after condom-maker Mankind and Blackstone-owned Nexus Malls. The company hopes the stock will make its trading debut by late November.

For the nine months ended Dec. 31, 2022, Tata Technologies’ profit grew 23% to 4,074 million rupees ($48.9 million) while its total income grew 15% to 30.5 billion rupees, draft IPO papers filed with the regulator in March show.

($1 = 83.2780 Indian rupees)

(Reporting by M. Sriram; Editing by Kim Coghill, Kirsten Donovan)