on Mar 18, 2021)Mumbai: The offer for sale (OFS) for the government’s 16.1% stake in Tata Communications closed on Wednesday with the total bid a little over 4.6 crore shares that are being divested. With the average bidding price at Rs 1,171, the government will mop up nearly Rs 5,400 crore from this divestment. The retail portion in the OFS was subscribed 1.4 times on Wednesday, the last day of the bidding, data on BSE showed.
According to the contours of the deal, after selling 16.1% stake through the OFS, the government will sell the remaining 10% in Tata Comm to its current main promoter Tata Sons, which will see its stake rise to about 59% in the company.
After the completion of the deal in its present form, Tata Comm will be the second listed Tata operating company in which the promoter will have the highest stake. Currently TCS, India’s largest software services provider, holds this crown with Tata Sons holding 72%.
Tata observers said that Tata Sons chairman N Chandrasekaran could take over as chairman of Tata Comm following the changes in shareholding structure. The last time a Tata Sons chairman was also the chairman of Tata Comm was in the early 2000s. Ratan Tata held that position at Tata Comm till April 2005. Tata Sons acquired Tata Comm (earlier known as VSNL) from the government in February 2002, beating
’s offer.
The divestment will clear the way for Tata Sons to manage Tata Comm’s affairs solely. In the past, the government was a stumbling block in Tata Comm’s equity fund-raising plans. The government didn’t want to dilute its equity, and so Tata Comm had to raise expensive debt to finance its growth initiatives. It also restricted Tata Comm from investing in other Tata entities, specifically in Tata Teleservices. “With the government offloading its holding, this may provide flexibility on strategic decisions in future,” said RBSA Advisors MD Manish Kaneria.
