Tata Technologies, specialising in engineering services outsourcing and product development IT, has raised Rs 141.06 crore ($30 million) by selling 13.04 per cent stake to Mizuho Securities-backed Alpha TC Holdings Pte and group private firm Tata Capital Growth Fund I.
The deal values the unlisted subsidiary of Tata Motors Ltd, at Rs 1,080 crore ($245 million) or around 7 times its operating profit and just a little less than 12 times its consolidated net profit for the year ended March, 2010.
“Tata Technologies has strong expertise in manufacturing-related verticals, positioning it in the sweet spot of the third wave of outsourcing,” said Akhil Awasthi, Managing Partner of Tata Capital Growth Fund.
Tata Motors held around 81 per cent in Tata Technologies as of March, 2010, and its holding is estimated to whittle down to around 70 per cent post fund-raising.
According to a report in Business Standard some unnamed minority shareholders, who apparently bought shares from the employees of the unlisted company, alleged that the shares had been sold at a discount to the investors to benefit the promoter group firm. Shares have been offered at Rs 251 a piece, compared to off-market transactions of the shares at around Rs 450-500 that puts the current value of the firm (pre-dilution) at around Rs 1,683-1,870 crore ($382.5 million-$425 million).
Founded in 1989, Tata Technologies provides full-vehicle development capabilities with an offshore engineering engagement model to reduce cost. Its revenue has doubled over the past five years and its profits have grown by over 11 times.
It has offices in 11 countries with delivery centres in India (Pune), the USA (Novi, Michigan), the UK (Coventry) and Thailand (Bangkok) with the global headquarters in Singapore. The company has a combined global workforce of more than 4,500 employees working from Tata Technologies facilities, as well as client sites.