Tata Sons IPO is a ‘social and moral imperative’, says SP Group Chairman Shapoorji Pallonji Mistry

As per the latest business developments, A day after Tata Trusts opposed the stock-exchange debut of Tata Sons, SP Group Chairman Shapoorji Pallonji Mistry welcomed the Reserve Bank of India's decision rejecting Tata Sons' application to surrender its registration as an Upper-Layer NBFC and directing it to comply with stock-exchange debut requirements.

In a statement on Friday, Mistry stated the RBI decision provided "full clarity" and called the public stock-exchange debut of Tata Sons a "social and moral imperative" aimed at strengthening transparency and accountability.

His comments came a day after Tata Trusts stated it had not agreed to take Tata Sons public and that all available options, "and not stock-exchange debut alone", should be explored. Mistry stated his group was ready to engage constructively with Tata Sons.

The comments come amid differences between Tata Trusts, which holds 66% of Tata Sons, and the holding firm's board over a potential stock-exchange debut.

In a statement, Noel Tata, chairman of Tata Trusts, reiterated the Trusts' position in his statement to the Tata Sons board, saying the board had already taken a decision on the stock-exchange debut offering.

"A matter of this kind requires papers, explanations, advice and time, and I have no doubt that these are being assembled. The Board will need a full briefing," Noel Tata had stated in a statement on September 17.

He additionally pointed out that the RBI's order does not specifically call for a stock-exchange debut. "The RBI's order 'does not mention stock-exchange debut'," Noel Tata stated, adding that it prescribed "no particular step" and did not state that Tata Sons was in breach.

He stated the board had yet to form a view on the legal implications of the RBI communication, including what it requires Tata Sons to do and by when.

"What its legal effect is, and what it requires of this Firm and by when, are questions upon which this Board has formed no view," he stated.

Noel Tata additionally clarified that his comments were not directed at any individual or regulator but were suggestions on the steps the Tata Sons board should take.

The developments follow the Tata Sons board meeting on Thursday, when the board reappointed N Chandrasekaran as chairman for another five-year term and decided to move ahead with considering a public stock-exchange debut, following the RBI's rejection of the firm's application to surrender its Core Investment Firm registration.

A potential stock-exchange debut of Tata Sons, the holding firm of the Tata group, could unlock value for shareholders of listed Tata firms that hold stakes in the unlisted parent, including Tata Chemicals, Tata Motors and Tata Investment Corporation.

Tata Sons was classified as an upper-layer NBFC by the RBI in 2022, bringing it under regulations that require such entities to list. The RBI rejected Tata Sons' application to surrender its registration on September 11 and directed the firm to comply with the applicable regulatory framework.