Tata Capital, the financial services arm of the Tata Group, has outlined plans to raise ₹15,000 crore ($1.72 billion) through debt instruments. The fundraising initiative, approved by the company’s board earlier this month, will include the issuance of green bonds and non-convertible debentures (NCDs).  

 1. Purpose of Fundraising  
The funds generated will be directed towards on-lending activities and operational expansion. This move comes as Tata Capital works to meet the Reserve Bank of India’s (RBI) requirement to list its shares publicly by September this year.  

 2. Green Bonds for Sustainable Projects  
A significant portion of the funding, ₹10,000 crore, will be raised through green bonds and market-linked NCDs via private placements. Green bonds are specifically aimed at financing environmentally friendly projects, such as renewable energy, clean transportation, and energy efficiency initiatives.  

 3. Additional Debt Instruments  
The remaining ₹5,000 crore will be raised through secured redeemable NCDs, which come with a liquidity window facility. These measures, detailed in the company’s filings, are part of a broader strategy to ensure liquidity and financial stability.  

 4. Merger of Tata Capital and Tata Motors Finance  
Last year, the boards of Tata Capital and Tata Motors Finance (TMFL) approved a merger, which has now been sanctioned by the RBI and the lenders of both firms. This merger will result in TMF Holdings, a Tata Motors-owned investment entity, holding a 4.7% stake in the merged company.  

 5.Regulatory Compliance and Public Listing  
As an ‘Upper Layer’ Non-Banking Financial Company (NBFC) under RBI regulations, Tata Capital faces stricter compliance requirements. This classification necessitates a public listing by September, a move expected to bolster the company’s capital base and reduce its debt burden.  

6. Tata Sons’ Stake in Tata Capital  
Tata Sons, which currently owns a 93% stake in Tata Capital, is unlikely to reduce its ownership below 75% in the upcoming Initial Public Offering (IPO). The public listing is anticipated to provide additional financial strength and align with regulatory expectations.  

 7. No Official Comments on Fundraising  
While the company has not issued a formal statement regarding its fundraising plans, industry observers view these steps as a strategic effort to strengthen Tata Capital’s position in the financial services sector.  

Tata Capital’s fundraising, its green bond initiative, and the merger with Tata Motors Finance underline the company’s commitment to sustainable growth and long-term value creation.