TATA OFFERS 21000 CRORES TO MISTRY GROUP | MAJORITY STAKES FROM TCS | 2020

MAJORITY STAKES FROM TCS 

Tata Sons are set to acquire an 18.4 percent stake in Shapoorji Pallonji Group (SP Group) in Tata Group Holding Company. It is expected to offer $ 3 billion (Rs 21,900 crore). Indian giant Tata Group will file a report on the proposal in the Supreme Court on October 28. It is learned that the Shapoorji Pallonji Group, part of the Mistry Group, has been at loggerheads with the Tata Group for the past few years.

Tata Consultancy Services (TCS), which belongs to the same group, will set up the bulk of the funds required for the acquisition of the SP Group stake. The parent company Tata Group has a 72 percent stake in TCS. It is learned that a recent buyback of shares has been announced. 

TCS share buyback is estimated at Rs 11,528 crore for Rs 21,000 crore. Without a buyback, Tata Sons would have to sell a majority stake in TCS, the Institutional Investor Advisory Services (IiAS) said in an April 23 note. The sale of a 16 percent stake in TCS would weaken Tata Sons Group's ability to hold together.

Funds from TCS are said to be used to buy a portion of Mistry’s stake. Tata Sons are in talks with outside investors. Sovereign says he is in talks with pension funds and needs to come to a resolution in the next two weeks. Although many investors are interested in buying the stake, the potential investor is crucial for Tata Sons. It is said that there is a possibility of a Tata Sons buyback clause in the regulations.

The Mistry family is also inclined to sell. However, it says there may be a tangle near valuation. Tata Sons' lawyer recently told the Supreme Court that it would buy the 18.4 percent stake in SP Group if it wanted to raise the funds needed to pay the bonds. 

Tata Group has expressed concern that if SP Group intends to raise funds through the mortgage of shares, those shares could go into the hands of anyone. In this context, the Supreme Court has directed SP Group, Cyrus Mistry, and his investment houses not to mortgage or transfer shares of Tata Sons till October 28. Tata Sons also advised SP Group not to take any decision on the shares already mortgaged till October 28, the next hearing date.