RBI-mandated IPO could make Tata Sons a takeover target for rivals
A boardroom battle at the centre of the 150-year-old business empire of Tata is, at its core, one between the family scion Noel Tata on one side and, indirectly, the government on the other. Noel Tata, the head of Tata Trusts, which hold two-thirds stake in the group holding company Tata Sons, is fighting to keep the company private. The government and the RBI are pushing to make Tata Sons public. At the meeting on 16 September in Mumbai, five board members, including Venu Srinivasan representing the Trusts, were in favour of proceeding with the public listing ordered by the Reserve Bank of India, which the conglomerate initially resisted. Noel, however, opposed it. Last weekend, a leaked letter from the RBI to Tata Sons showed that the central bank had ordered it to comply with its rules “immediately”, paving the way for a listing. Given the company’s economic heft, people believe the RBI’s move had the approval of the Union government. Its largest minority shareholder, the indebted Shapoorji Pallonji group, lobbied the government and RBI for an IPO so it can sell at least part of the 18 per cent stake in Tata Sons. People close to Tata Sons believe that a listing could make the conglomerate, through the open float and shares of other listed group companies, a target for business rivals. Meanwhile, the trusts have said the process of identifying Chandrasekaran’s successor should proceed despite the board’s decision to retain him. This process is being delayed by regulatory hurdles after complaints by trustees close to Chandrasekaran. (20 September)