WARBURG TO BUY 43% STAKE IN TATA TECH FOR $360 M

Tata Motors Ltd on Thursday said it will sell a 43% stake in Tata Technologies Ltd to an affiliate of US-based private equity firm Warburg Pincus Llc for $360 million (₹2,231 crore), seeking to raise funds to cut debt.

Warburg will purchase a 30% stake from Tata Motors and its subsidiary Sheba Properties Ltd as well as the entire 13% stake held by Tata Capital Ltd. After the divestment, Tata Motors and other Tata group firms will retain their remaining 43% stake.

Tata Technologies provides outsourced design, research and development services to the automotive, aerospace and industrial machinery industries. Tata Motors owns 70.4% of the Singapore-based company, according to its annual report.

“This transaction represents a tremendous endorsement of what we have achieved so far,” said Warren Harris, MD and CEO at Tata Technologies.

Tata Technologies represents a good investment proposition for the future and Tata Motors is likely to stay invested in the company, Harris said.

Asked whether the company will seek a stock-market listing, he said there are no such plans for the near term. The option of an initial public offering will be evaluated over the next three to five years, he said.

This is the first big divestment by the Tata group flagship since N Chandrasekaran came on board in February as chairman of Tata Sons Ltd, and of its group companies.

The move will help Tata Motors pare debt. Its consolidated debt (including that at UK arm Jaguar Land Rover Automotive Plc) stood at ₹79,323.36 crore at the end of 2016-17.

The move is also part of Tata Motors’ plan to exit from noncore businesses and in line with Chandrasekaran’s effort to consolidate the operations of Tata group’s flagship companies.