Tatas to gain Rs 4,000 cr from TCS share sale

It could not get better than this for the Tata group! The largest-ever initial public offering from the Tata stable will make the current sh...

It could not get better than this for the Tata group! The largest-ever initial public offering from the Tata stable will make the current shareholders of India’s biggest software company Tata Consultancy Services — Tata group holding company Tata Sons, various Tata trusts and construction magnate Pallonji Mistry and family — richer by Rs 4,000 crore.

According to the red-herring prospectus filed with market regulator Securities and Exchange Board of India (Sebi), Tata Sons will sell 1.45 crore shares (about 3.17 per cent stake) in TCS while Shapoorji Pallonji Mistry and Cyrus Pallonji Mistry will offer 12.6 lakh shares (0.28 per cent) each for sale. This will be excluding the greenshoe option.

With analysts expecting a premium of Rs 999 on Re 1 share each, both the Tatas, the Mistrys and various Tata trusts will together make close to Rs 3,268 crore.

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According to the prospectus, if the demand for the shares are high, Tata Sons and Mistry will offer additional shares (greenshoe) to shareholders, which will take their total windfall to Rs 4,098 crore. This means Mistry and family will a get a total of Rs 400 crore while Tata Sons alone will rake in Rs 1,815 crore.

Interestingly, Tata Sons decided to issue bonus shares worth Rs 9,110 crore just before the issue on May 5, 2004 in its annual general meeting of shareholders. The bonus was issued in the ratio of 1:4. The same day the company split with a face value of Rs 10 shares to Re 1.

Even after the IPO is over, Tata Sons will own 80.95 per cent stake in the company after the green shoe option is exercised.

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