Tata Capital Financial Services Ltd (TCFSL) has announced its plans to raise up to Rs 70 billion through non-convertible bonds (NCDs) to support its growth initiatives. While TCFSL focuses on retail, SME, and corporate funding, efforts are underway for its merger with parent company Tata Capital Ltd (TCL) and Tata Cleantech Capital in the current financial year. TCFSL recorded a significant 32.03% year-on-year growth in assets, reaching Rs 785 billion by the end of March 2023. With a capital adequacy ratio of 17.3% and a tier-1 level of 13%, TCFSL remains well-positioned for expansion. The parent company, TCL, has already infused Rs 11.50 billion in equity shares into TCFSL.
According to debt market sources, the funds raised through NCDs are likely to be issued in multiple tranches. Additionally, TCFSL has scheduled the reissuance of bonds with a three-year maturity for the upcoming week. The base issue size is Rs 2 billion, with a green shoe option of Rs 8 billion.
CRISIL Ratings has assigned its highest rating of "AAA/Stable" to the proposed NCDs worth Rs 70 billion. The rating assessment considers the consolidated performance of Tata Capital and its subsidiaries, including TCFSL, Tata Capital Housing Finance, Tata Cleantech Capital Limited, Tata Securities, and Tata Capital, Singapore. CRISIL notes that the merger aligns with Tata Group's strategic plans to comply with the revised regulatory framework for TCFSL and improve operational efficiency and management effectiveness.