Tata Capital to issue green bonds, NCDs to raise Rs 15,000 crore.

Tata Capital, the financial services arm of the Tata Group, is set to raise ₹15,000 crore ($1.72 billion) through debt, including the issuance of green bonds and non-convertible debentures (NCDs). The company's board of directors approved the fundraising plans earlier this month.

With a deadline from the Reserve Bank of India (RBI) to list its shares by September, Tata Capital intends to use the raised funds for business operations and on-lending purposes. The green bonds will specifically finance projects related to renewable energy, energy efficiency, and clean transportation.

On February 6, the board approved two fundraising methods: ₹10,000 crore through green bonds and market-linked NCDs via private placements. Additionally, the company plans to raise ₹5,000 crore by issuing secured redeemable NCDs, which will include a liquidity window facility. Tata Capital has not provided further details on these plans.

In June last year, Tata Capital and Tata Motors Finance's boards approved the merger of Tata Motors Finance into Tata Capital, and this merger has since received approval from the RBI and the relevant lenders.

Fitch Ratings has designated Tata Capital as an "Upper Layer" Non-Banking Financial Company (NBFC), which means it faces stricter regulatory requirements, including the mandatory public listing by September. The public offering is expected to strengthen the company's capital base and reduce its leverage. Tata Sons, which currently holds a 93% stake in Tata Capital, is unlikely to reduce its ownership below 75% in the upcoming IPO.

Following the merger, TMF Holdings, a core investment company owned by Tata Motors, will hold a 4.7% stake in the combined entity.

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