Tata Capital lines up Rs 5,000 cr play

Tata Capital will offer services in the capital market, merchant banking, housing finance, and vehicle and retail finance, reports Indulal PM.

The Tatas are understood to have lined up massive investment plans for their financial services’ business. Tata Capital, the newly formed group finance firm, is planning to invest Rs 5,000 crore over the next three to four years.

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The company is understood to have appointed US-based Boston Consulting Group as advisers to prepare an investment blueprint. Tata Capital will offer services in the capital market, merchant banking, housing finance, and vehicle and retail finance. Tata Capital is expected to play a bigger role in merchant banking and private equity investments. When contacted, a Tata group spokesperson said, “We do not wish to comment on market speculations.”

"The company will be initially investing close to Rs 1,000 crore. Over the next four years, it will be investing over Rs 5,000 crore," a source close to the Tata group said.

Sources said the Tatas were leveraging the existing financial services business. For instance, the group’s vehicle financing portfolio is around Rs 9,000 crore. “There is a huge opportunity to grow this business due to a boom in the automobile sector,” said a source close to the Tata group. Sources said the plan might include setting up a retail distribution network and a private equity fund.

Tata Capital is in the process of creating a new team. Praveen Kadle, former executive director, (finance and corporate affairs), Tata Motors, is expected to be heading the venture. The company is expected to start the process of recruiting executives.

Other finance subsidiaries of the group, including Tata AIG Insurance, Tata Asset Management Company, Tata Investment Corporation and Tata Securities are expected to continue as independent companies. Tata Investment Corporation along with Tata Sons is a promoter of Tata Mutual Fund, and Tata Asset Management is one of India’s oldest fund houses with a million-strong investor base.