Noel Tata Fights to Keep Tata Sons Private, Challenges RBI Listing Mandate

MUMBAI, Tata Trusts chairman Noel Tata is set to make a strong case to keep Tata Sons private and unlisted, challenging a recent Reserve Bank of India (RBI) directive that has pushed the corporate giant closer to a mandatory stock-market listing. A contentious board meeting is expected, where Tata plans to argue that the RBI's September 11 letter requires compliance with rules for upper-layer non-banking financial companies but does not explicitly demand a public listing.

Tata's strategy involves several approaches. He is expected to urge Tata Sons to seek a reconsideration from the RBI regarding its rejected application to surrender its core investment company registration. Furthermore, legal advisers are exploring options such as reducing Tata Sons' asset base below the ₹1 lakh crore threshold that triggers listing requirements, or even restructuring the company into two separate entities.

However, such restructuring could face regulatory scrutiny if perceived as an attempt to bypass the listing rules. Noel Tata believes that maintaining an unlisted structure allows Tata Sons to adopt a long-term strategic view, free from the pressures of quarterly market performance.

This, he argues, is crucial for safeguarding Tata Trusts' ability to pursue its extensive philanthropic and social objectives.

Adding another layer to the discussion, Tata also plans to present a letter from Shapoor Mistry, chairman of the Shapoorji Pallonji Group, requesting approximately ₹25,000 crore for a 3-4% stake in Tata Sons. The SP Group is the second-largest shareholder.

Noel Tata is expected to propose that a negotiated buyout of the SP Group's stake could serve as a liquidity solution that simultaneously helps Tata Sons remain unlisted, addressing the SP Group's financial needs without resorting to a public offering. However, this particular avenue introduces a complication: some Tata Trusts trustees have voiced concerns about a potential conflict of interest.

Shapoor Mistry is Noel Tata's brother-in-law, making Noel an interested party in any transaction involving the SP Group's stake.

This intricate situation underscores the high stakes and complex considerations facing the Tata Sons board as it navigates regulatory demands and internal dynamics.

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