Tata mulls IPO of its luxury unit Jaguar Land Rover

Bloomberg

Tata Group is considering an initial public offering of Jaguar Land Rover, the luxury-car maker the Indian conglomerate bought in 2008 for $2.4 billion, people with knowledge of the matter said.
Senior Tata Group officials have held preliminary internal discussions over the past few months about the potential listing of Jaguar Land Rover on an international stock exchange, according to the people, who asked not to be identified because the information is private. The conglomerate is weighing London and New York as possible listing venues for Jaguar Land Rover, which is a unit of Tata Motors Ltd., one of the
people said.
A spokesman for Tata Group, which has 29 listed companies, said “there are no plans to list JLR.” A representative for Tata Motors said “there is no truth in the information,” without
elaborating.
The Indian company has turned around Jaguar Land Rover since buying the business from Ford Motor Co., helping boost revenue more than sevenfold between 2008 and 2015.
Deliberations are at an early stage, and Tata Group hasn’t made a final decision to pursue an IPO of the business, according to the people. Details such as timing and the potential fundraising size haven’t been set, the people said.

TURNAROUND STORY
A listing of the luxury unit would give it an option to raise funds in the future at a time Tata Motors’s India operations are struggling, according to Mahendra Patil, managing partner at Mumbai-based consulting firm XMPUS Financial Services LLP. The automaker’s India business has posted a loss in two of the past three financial years.
“The acquisition of Jaguar and Land Rover has been one of the most successful turnaround stories by the Tatas,” Patil said. “So reaping its benefits, by listing when the Indian operations are down, may be one of the most appropriate decisions.”
Shares of Tata Motors rose as much as 3.4 percent in Mumbai trading Tuesday. They were up 3.1 percent to 466.50 rupees at 12:51 p.m., making Tata Motors the best performer on the benchmark S&P BSE Sensex, which was little changed.
Selling stock would help Jaguar Land Rover fund the development of new models and investments in connected-car technologies and autonomous driving systems. A listing of the business could become one of the first major tasks for Tata Group’s new chairman, Natarajan Chandrasekaran, who took over leadership of the conglomerate in February.
Any listing of Jaguar Land Rover would follow sports-car brand Ferrari NV, whose shares have more than doubled in New York trading over the past year. Aston Martin, the British manufacturer of James Bond’s favorite vehicles, is considering a London IPO as early as next year, people familiar with the matter said last month.
Jaguar Land Rover will invest 4 billion pounds ($5.1 billion) in the financial year through March 2018, including spending on a new factory in Slovakia, Tata Motors Chief Financial Officer C. Ramakrishnan said last month. Tata Motors had 785.8 billion rupees of gross debt at the end of March, according to an investor presentation posted on its website.
Tata Motors forecast last month that new models and upgrades including the Velar sport utility vehicle will help its luxury unit widen profit margins. The automaker’s luxury unit last week said it’s working with Lyft Inc. on autonomous-driving technology and will offer vehicles for rent to the San Francisco-based startup’s drivers.