Shares of Tata Consultancy Services Ltd. slipped as much as 5.9 percent, the most since November 2016, after 2.84 crore shares (or 1.5 percent equity) changed hands on the National Stock Exchange, according to Bloomberg data.
The parent company Tata Sons had agreed to sell shares of the country’s largest software exporter at Rs 2,872-2,925 apiece to raise Rs 8,000 crore, according to the term sheet accessed by Bloomberg News. The price was nearly a 4 percent discount to the stock’s closing price on Monday.
The company said it will use the proceeds to pare down debt in its telecom unit. Citigroup Global Markets India and Morgan Stanley India are the joint placement agents for the share sale that will take place from March 13-15. Tata Sons will hold a little over 72 percent in the company after the transaction is completed.
The salt-to-software Tata Group had in October agreed to sell its mobile services business to India’s largest telecom operator Bharti Airtel Ltd. as low tariffs and rising debt continue to drive consolidation. At the time, the group had assured lenders that it would repay all debt with zero haircuts.
The combined debt of the group’s telecom business — comprising Tata Teleservices Ltd. and Tata Teleservices (Maharashtra) Ltd. — stands at Rs 40,260 crore, with Tata Tele (Maharashtra) contributing Rs 17,000 crore. The two units reported losses worth Rs 38,175 crore as of March 2017.
The share sale will take Tata Sons’ mop-up from TCS to more than Rs 24,000 crore so far this year. The parent had raised Rs 10,306 crore by participating in software services provider’s Rs 16,000-crore buyback in May. It has received another Rs 6,830 crore as dividend so far in 2017-18.