Money matters

Mumbai, Sept. 13: Tata Technologies Ltd (TTL), a subsidiary of the Rs 70,938-crore Tata Motors, will raise additional capital from private equity investors.

TTL had been mulling an initial public offering (IPO) for the last two years to raise funds. It has now decided to approach private equity funds.

Bankers said a portion of the fund raised from private equity investors might be used to reduce the debt of parent Tata Motors.

Singapore-headquartered TTL is an engineering services outsourcing company that also offers product development IT services. With a global workforce of over 4,000, the firm has development centres in Germany, India, Thailand, the UK and the US.

Tata Motors has been on a fund raising spree ever since it bought Jaguar and Land Rover last year for $2.3 billion. It owns more than 80 per cent of TTL.

Tata Motors recently raised Rs 2,500 crore from a fixed deposit scheme that it tied up with commercial banks to meet the working capital needs of JLR. It hopes to secure a £340-million loan from the European Investment Bank soon.

Sources in the Tata group, however, said the funds raised from a stake sale to private equity players through the issue of additional capital would largely be used to fund TTL’s business activities.

“Tata Technologies is looking to set up another development centre. In the past two years, it was considering plans to raise funds by diluting a stake to the public. But the management is now considering the private equity route,” said a Tata group official.

Patrick McGoldrick, CEO of Tata Technologies, declined to comment on the development.

TTL has drawn up plans to notch up revenues of $1 billion over the next five to seven years. The company has been doubling profits on a year-on-year basis over the past three years.

In May, McGoldrick said the company’s revenues totalled $300 million.

TTL bought the UK-based engineering and design services company Incat in 2005 followed by engineering knowledge and enterprise firm iKS. TTL has been consolidating its subsidiaries around the world and has retired the Incat and iKS brands this year.

Around 15 per cent of TTL’s revenues are generated by Tata Motors, while its other key customers include aeronautical companies and global automobile players.