Tata Capital IPO: International Finance Corporation set to pocket hefty returns; here's how much shares it's offloading

Tata Capital IPO: The International Finance Corporation (IFC) is poised to make significant returns from the much-awaited initial public offering of Tata Capital, which could raise around USD 2 billion (₹17,000 crore), as the World Bank Group arm seeks to cut its stake in the non-banking finance company (NBFC).

According to the updated draft red herring prospectus (DRHP), the IFC will divest 3.58 crore shares in the offering, partially exiting an early bet on Tata Capital's cleantech business made in 2011.

IFC, the World Bank Group's private sector unit, joined hands with Tata Capital in 2011 to establish Tata Cleantech Capital Ltd (TCCL), with the intention of financing renewable and sustainable infrastructure projects.

Over the past decade, TCCL has flourished as a key green financier, supporting more than 500 renewable projects across wind, solar, biomass, water treatment, small hydro, and electric mobility.

Additionally, the company has sanctioned over 22,400 MW of clean energy capacity and built one of the most comprehensive cleantech portfolios in the country. By the financial year 2024-25 (FY25), the cleantech and infrastructure finance loan book had crossed ₹18,000 crore, growing at a compound annual growth rate (CAGR) of nearly 32% over the last two years, draft papers showed.

Following a merger of TCCL with Tata Capital, IFC now holds 7.16 crore shares, or about 1.8%, in the parent NBFC. Of this, it plans to sell 3.58 crore shares in the forthcoming IPO.

IFC had entered at an adjusted price of around ₹25 per share, valuing its overall investment at roughly ₹179 crore. At the rights issue price of ₹343 per share, this stake is worth nearly ₹2,458 crore, translating into a notional profit of about ₹2,278 crore. Delivering nearly 13 times, the investment in Tata Capital has been highly rewarding for IFC.

The potential gains are based on the rights issue valuation. The IPO price is expected to be higher, which could further enhance IFC's returns, people familiar with the matter said.

Tata Capital, in July, had mobilised ₹1,752 crore through a rights issue priced at ₹343 per share.

The upcoming IPO will consist of a fresh issuance of up to 21 crore shares and an offer for sale of up to 26.58 crore shares, including 23 crore shares from promoter Tata Sons and 3.58 crore shares from IFC.

Promoter Tata Sons owns 88.6% of Tata Capital.

The money raised will be used to augment Tier-I capital and fuel lending growth.