Tata Capital Housing Finance plans to raise INR 8,000 crore through debt, focusing on subordinated debentures, to fortify its position in the evolving housing finance market. The average home loan size has surged by 22% as the industry shifts from affordable to larger residences. The Tata Group eyes financial services growth, intending to list Tata Capital Financial Services by 2025. Agratas Energy Storage Solutions, another Tata entity, contemplates a $500 million green loan. Tata Group entities have successfully raised $660 million in international debt, aligning with increased product demand. The group's strategic financial moves anticipate market opportunities.
Tata Capital Housing Finance is strategically positioned to begin a significant debt-raising endeavour, with a target of INR 8,000 crore, representing one of its largest fundraising endeavours to date. The upcoming talks that are planned for the February 5th board meeting highlight the company's strategic goal to strengthen its position in the constantly changing home loan industry. One significant component of this capital infusion is the issuance of debentures totalling INR 500 crore, which are categorised as Tier-II capital, or subordinated debt—a vital component of the required reserves for banks and non-banking organisations.
In response to the transformative shifts witnessed in the housing finance landscape post-pandemic, there is an observable trend away from the affordable housing segment towards more luxurious residences, with perceptive customers opting for larger dwellings. Manifesting this paradigm shift, the average size of home loans has experienced a commendable 22% surge, escalating from INR 20.2 lakh in the fiscal year concluding in March 2020 to a noteworthy INR 24.7 lakh in March 2023. While the Tata Group has not been as assertive in the home loan sector so far, it strategically recognises the financial services domain as a pivotal avenue for substantial growth.
In line with this vision, the group has outlined plans to list Tata Capital Financial Services, the parent entity of its financial services business, by 2025. This strategic move aligns with the Reserve Bank of India's (RBI) directives to designate it as an upper-layer non-banking financial company (NBFC). Both Tata Capital Financial Services and its parent company, Tata Sons Private Ltd, earned the distinctive "upper layer" NBFC designation from the RBI in September of the preceding year. Adhering to this upper-layer classification necessitates a rigorous regulatory framework and mandatory listing within the stipulated three-year timeframe.
Meanwhile, within the expansive umbrella of the Tata Group, Agratas Energy Storage Solutions—an entity specialising in battery cell manufacturing—contemplates a substantial green loan, with a formidable target of USD 500 million. Within a broader financial narrative, Tata Group entities, including the holding entity Tata Sons Pvt Ltd, have efficiently navigated the international debt market, securing an impressive corpus totalling USD 660 million.
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