Tata Sons will raise $1bn from TCS stake sale

Tata Sons Ltd India’s biggest business group plans to sell $1.25 billion of its stake in Tata Consultancy Services, according to terms of the transaction

Tata Sons Ltd India’s biggest business group plans to sell $1.25 billion of its stake in Tata Consultancy Services, according to terms of the transaction

Shares of Tata Consultancy Services declined over 5 per cent today following reports that Tata Sons is planning to raise around Rs 8,200 crore by selling stake in the IT major. Tata Sons' move to sell over 28 million shares of TCS comes nearly 10 months after it received Rs 11,722 crore by participating in the software major's share buyback programme.

The price of the stake sale is likely to be between Rs 2,872 and Rs 2,925, Bloomberg reported. The price range represents a 4.2 percent to 5.9 percent discount to its last close. On the other hand, a "block deal" is a transaction of over 500,000 shares - or a minimum value of Rs 5 crore - executed through a single transaction. The orders in a block deal are not shown to people who trade from normal trade window.

Other industry experts point out that Tata Sons may choose to use the TCS stake sale proceeds to fund Tata Steel, which is hoping to snap up Bhushan Steel and Bhushan Steel and Power. The plan is to reduce the considerable debt obligations in the wireless telecom units - Tata Teleservices and Tata Teleservices (Maharashtra) - and to spruce up equity interests in key Tata group companies.

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In addition, the holding company is seeking a $1.5 billion offshore syndicated loan, to pay down expensive debt at its telecommunications unit.

Shares of India's largest exporter, Tata Consultancy Services (TCS) fell almost 6 per cent in morning deals today. TCS, the top Indian software services exporter, is the second-most valuable company in the country with a market capitalisation of close to $90 billion., according to a report of Reuters.

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