Tatas offload 0.84 per cent in TCS for Rs 1,000 crore
The Economic Times — February 9, 2007

Tata Sons - the holding company of the Tata group - raised more than Rs 1,000 crore on Thursday by selling 0.84 per cent of its equity stake in software major Tata Consultancy Services (TCS), taking the total amount raised so far to about Rs 2,800 crore (about $622 million). Although the Tata group didn't provide reasons for selling the stake in its disclosure to the BSE, it is learnt that the proceeds could likely be used for part-funding Tata Steel's $12.1-billion acquisition of Corus.

In a statement issued to the BSE, TCS said that Tata Sons has sold about 8.1 million equity shares of the software company, to an undisclosed buyer. While the statement didn't mention the price at which the transaction was concluded, going by Thursday's closing price of Rs 1,300 per share, the value of the deal could total up to Rs 1,035 crore ($230 million).

This is the third time in three months that the holding company has diluted its stake in TCS, which on December 31, 2006, stood at 78.3 per cent. On February 6, Tata Sons sold 6.9 million equity shares raising Rs 900 crore. In a similar transaction in November 2006, Tata Sons had raised another Rs 900 crore by diluting 0.86 per cent of its stake in TCS. A bulk of it was sold to the Mauritius-based HSBC Global Investment Fund.

TCS is India's largest software exporter and a cash cow for the Tata group. On Thursday, TCS shares were down 0.5 per cent at Rs 1,300 on the BSE. In the past one month, the IT major's stock has risen 3.5 per cent on the BSE, while the Sensex rose 8 per cent over the same period. According to Tata group officials, Tata Steel - through Tata Sons - is expected to contribute $ 4.1 billion of the total deal amount.

Tatas also line up GDR listing

Apart from diluting its stake in TCS, the Tatas are also looking at various other financial instruments, including preferential allotment and a GDR listing in London. The Tatas have floated a special purpose vehicle, Tata Steel UK, for acquiring Corus. Tata Steel clinched Anglo-Dutch steelmaker Corus in an auction process, beating Brazil's CSN through its 608 pence bid. After the acquisition, Tata Steel said finance for the acquisition would be funded by way of a combination of credit facilities and cash contribution by Tata Steel to Tata Steel UK.