Tata Groups' holding company Tata Sons is planning to buy around 1.7 percent of stake in the group's auto wing, Tata Motors. At the current value, the shares will be worth as much as Rs 2,000 crore, the Economic Times reported.
According to a term sheet accessed by ET, Tata Sons is all set to buy 1.7 percent of stake at Rs 421.56 per share. At 10.57 am on Tuesday, shares of Tata Motors are trading at Rs 423.85.
Citibank is the advisor book runner for the transaction. "It got launched on Monday evening through a reverse book building method," the business daily quoted an official as saying.
Following the news, the shares of Tata Motors, Tata Global Beverages and Tata Chemicals rose. Tata Motors jumped as much as 4.6 percent, the highest since July 10. Tata Global Beverages rose as much as 2.37 percent and Tata Chemicals gained less than a percent.
As of June 30, the holding company owns 31.6 percent stake in Tata Motors. Foreign institutional investors held 23.49 percent stake and large domestic mutual fund houses held 5.32 percent of stake in the company.
It is the second instance in past one year, where Tata Sons is buying a stake in Tata Motors. In December 2016, the group had bought nearly 1.02 percent stake for about Rs 2,430 crore.
With the deal, the group company's holding in Tata Motors will increase to 33.3 percent. Other Tata Group companies such as Tata Industries and Tata Investment own 2.5 percent and 0.37 percent shares in Tata Motors.
Last week, Tata Sons had started a new talking point, as the firms sought shareholders' approval to amend its memorandum of association and articles of association to convert itself from a public limited company to private limited.
Cyrus Mistry-owned Cyrus Investments had objected to Tata Sons' attempt to convert to a private limited company saying that it amounts to oppression of minority shareholder.
"The proposal to convert Tata Sons from a public company to a private company constitutes yet another act of oppression of the minority shareholders of Tata Sons at the hands of the majority shareholders," Cyrus Investments had said in its letter to Tata Sons' board of directors.
