Tata Power sell Tata Communications shares to parent for Rs. 2,150 crore

As part of the group’s move to bring down cross-holding among group companies and also exit non-core businesses by restructuring investment portfolios, Tata Power on Monday decided to sell its stake in Tata Communications and its holding firm Panatone Finvest to Tata Sons for around Rs2,150 crore. “The board of Tata Power has approved sale of its shares in Tata Communications and Panatone Finvest to Tata Sons and its affiliates. Panatone Finvest holds 30.1% in Tata Communications,” the largest private sector power company said in a statement. It further said the move is a part of the company’s plan to monetise its non-core assets and improve the balance-sheet to set the stage for the next phase of growth. “The estimated realisation will be about Rs. 2,150 crore and is subject to shareholder approval,” it said. On 23 March, the company had informed the stock exchanges it would be selling over 59 crore shares in Panatone Finvest, which represents around 39.98% of its paid-up equity, to the parent Tata Sons for Rs1,542.61 crore. It will also sell a 4.7% stake in Tata Communications to Panatone for Rs613.46 crore. Tata Power, together with its subsidiaries and jointly controlled entities, has an installed gross generation capacity of 10,757 MW including in the thermal, hydro, wind and solar areas. It can be recalled that after N. Chandrasekaran took over the mantle of the diversified group in February 2017 as chairman after the acrimonious exit of his predecessor Cyrus Mistry in October 2016, the Bombay House, as the over $105 billion conglomerate’s headquarters is known, had decided to consolidate group entities. The salt-to-software empire has around 30 key listed companies, most of which are cross-held by the companies themselves, while Tata Sons own only around a third of equity in most of these companies. Earlier this fiscal year, Tata Steel and Tata Motors had pared their stakes in each other and also in other group companies like Indian Hotels, Tata Chemicals, TCS, and Tata Global Beverages among others, which were all snapped up by Tata Sons, helping the parent increases its holding in group companies. The software major TCS, which also contributes over 85% of the group profit is the only large group company in which Tata Sons owns more than 70% now. Till early this month, it had 75% holding when it sold in the market around 2% for over Rs9,000 crore. Late last June, Tata Sons bought around 2.9% shares in Tata Motors from Tata Steel for Rs3,783 crore as part of its move to reduce cross-holdings among group companies. With that it had also increased its holding in the country’s largest automobile company 31.06%. Earlier this month, Tata Sons had asked group companies and holding trusts to sell their holdings in Indian Hotels, which owns the Taj brand of luxury hotels to itself. Accordingly, it had increased its holding in the largest hotels company by 6.64%. Tata Sons acquired these shares primarily from Sir Dorabji Tata Trust, Lady Tata Memorial Trust and Sir Ratan Tata Trust.