 "Tata Capital Housing Finance Limited")
Tata Capital Housing Finance is planning to raise Rs 8,000 crore as debt in one of its largest fundraising exercises. The board of Tata Capital Housing Finance, a subsidiary of Tata Capital Financial Services, will meet on February 5 to discuss the fundraising plan.
The proceeds will be used to increase the company’s presence in the fast-growing housing finance market.
According to a banking source, of the Rs 8,000 crore, the company will raise debentures qualifying as subordinated debt, or Tier-II capital, of up to Rs 500 crore.
Tier-II capital is the second layer of capital that a non-banking firm or a bank must keep as part of its required reserves.
Bankers said after the pandemic, the housing finance market is going through a transition. There is a shift from the affordable housing sector to more upscale residences as customers are buying bigger houses.
The average home loan size has witnessed a 22 per cent increase from Rs 20.2 lakh in the financial year ending March 2020 to Rs 24.7 lakh in March 2023.
Though the Tata group is not as aggressive in the home loan market till now, it has identified the financial services sector as the next big growth area.
The group also plans to list Tata Capital Financial Services, the holding company of the financial services business, by 2025. This will help it meet the Reserve Bank of India’s (RBI’s) guidelines to list it as an upper layer non-banking financial company (NBFC).
Tata Capital Financial Services and its parent firm, Tata Sons Private Ltd, were identified as “upper layer” NBFC by the RBI in September last year.
The upper-layer tag for both Tata Sons and Tata Capital Financial Services would require both the companies to follow a stringent disciplinary structure and mandatory listing in three years.
Bankers said another Tata firm, battery cell manufacturer Agratas Energy Storage Solutions, is also planning to raise $500 million as green loan.
Tata group companies, including its holding firm, Tata Sons Pvt Ltd, have tapped the overseas debt market to raise funds worth $660 million. It is to fund operations in the first half of the ongoing financial year as demand for the group's products surge. An email to the Tata group did not elicit any response.
According to data sourced from the RBI, Tata Sons raised $167 million to refinance old overseas loans while Tata SIA Airlines raised $279 million to import aircraft.
Tata Capital Financial Services raised an additional $215 million for on-lending purposes. The group’s companies are tapping the overseas markets even as cost of funds is now far higher. This is after the US Federal Reserve undertook 11 consecutive rate hikes, including four in 2023.
Plans to list Tata Capital Financial Services by 2025
Another Tata Group firm Agratas Energy Storage Solutions also planning to raise $500 mn as green loan
