TCS looks at foreign listing

Plans over $1 bn equity sale to fund group buyouts.

Tata Sons, the holding company of the Tata group, is considering a $1 billion-plus (over Rs 4,300 crore) overseas equity sale in Tata Consultancy Services (TCS) this year to fund acquisitions of other entities.

Banking sources said the equity offer may take place in six months and include a fresh share offer as well. The group is examining the pros and cons of listing on the major exchanges, including London, Luxembourg and New York stock exchanges.

A listing on the New York Stock Exchange, where other software giants "" Infosys, Wipro and Satyam "" are listed, gets immediate attention from global brokerages. But the flip side is the time-consuming compliance norms under the Sarbanes-Oxley regulations. 

THE BIG FOUR (Major IT firms listed abroad)
On April 10, 2007
	ADR Price  (in $)	Shares per ADR	Price  best*	Premium (in %)
Wipro	16.32	1	12.76	27.89
Patni Computers	23.83	2	18.97	25.65
Satyam	23.28	2	20.61	12.96
Infosys Techno	52.08	1	46.49	12.03
* Converted underlying price according to the stock price on the BSE

A listing on the London Stock Exchange is easier, but no major Indian software firm is listed on this bourse yet. The possibility of TCS listing in Luxembourg appears to be the least likely option.

When contacted, a Tata group spokesperson said the information was speculative and the group did not want to comment.

Bankers said raising funds through an equity sale in TCS makes sense as Tata Sons holds a 78.35 per cent stake in the country's largest software company. As a policy, Tata Sons chips in with funds whenever any group entity makes a major acquisition.

For instance, Tata Sons is expected to contribute to Tata Steel's $12.15 billion purchase of Anglo-Dutch steel company Corus, although a major chunk of the money will be raised through debt.

Tata Sons has been raising funds by diluting its stake in TCS in the domestic market over the past few months. It raised nearly Rs 2,800 crore by selling around 2.5 per cent in three tranches in November and February.

Although the official reason for the dilution was not announced, market sources said Tata Sons had raised money to finance Tata Steel's acquisition of Corus Group.

TCS was listed on the exchanges through a Rs 5,000-crore offer in 2004. The price band for the offer was fixed between Rs 775 and Rs 900 per share. The TCS stock today closed at Rs 1,190.50 on the BSE, 0.54 per cent lower than yesterday's close.