In a significant corporate move, the Board of Directors of Tata Motors Limited (TML), Tata Capital Limited (TCL), and Tata Motors Finance Ltd (TMFL) have approved the merger of TMFL with TCL through a National Company Law Tribunal (NCLT) scheme of arrangement. As part of the merger, TCL will issue its equity shares to the shareholders of TMFL, resulting in TML effectively holding a 4.7% stake in the merged entity.
E&Y, ICICI Securities, and Wadia Ghandy & Co are the transaction advisors to TCL, while PwC, Axis Capital, and AZB & Partners are the transaction advisors to TMFL.
TCL, rated AAA by all leading rating agencies, is one of India's largest diversified non-banking financial companies (NBFCs), with an asset under management (AUM) of approximately INR 1.6 lakh crore. It serves customers with over 25 product offerings across Retail, SME, and Corporate Segments. TMFL, with an AUM of around INR 32.5 thousand crore, primarily provides financing solutions for new and used commercial vehicles (CV), passenger vehicles (PV), dealers, and vendors.
In the fiscal year 2024, TCL and TMFL reported profits after tax of INR 3,150 crore and INR 52 crore, respectively. This merger aligns with TML’s strategy of exiting non-core businesses and focusing its capital on emerging technologies and products.
TCL has limited presence in CV/PV financing. With this merger, TCL will gain new customers in the fast-growing CV/PV financing segments, which it aims to serve with innovative products and digital offerings, providing differentiated growth opportunities to employees.
The scheme of arrangement will require approvals from the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the NCLT, as well as the shareholders and creditors of TCL and TMFL. The process is expected to take approximately 9-12 months to complete. The merger is not expected to have any adverse impact on customers or creditors of TMFL.
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