Tata Sons to sell minority stake in Tata Digital to PE funds to raise $1 bn: Report

Salt-to-chemicals conglomerate Tata Sons is planning to sell a minority stake in its subsidiary, Tata Digital Pvt. Ltd (TDPL), to raise approximately $1 billion from global private equity funds, said a report on Tuesday. TDPL operates the Tata Neu super app, which serves as a consolidated e-commerce platform under the brand name 'Tata Neu'.

The platform aims to connect consumers with various businesses operated by Tata companies on a single platform.

At present, the discussions regarding the stake sale are at an informal level with a few well-known private equity funds, Moneycontrol reported on Tuesday.

However, it is expected that a formal process will commence in the near future. Once the valuation exercise is completed and a tentative list of investors is finalised, a proposal will be presented to the company board for further consideration. It is anticipated that a deal will be executed before March of this year, as long as everything progresses as planned.

Launched in April 2022, Tata Neu is India’s first super app and is modeled on China’s ubiquitous Alipay and WeChat. A super app can be described as a mobile or web application that combines multiple services into one platform. Tata's super app allows users to buy groceries and gadgets as well as reserve airplane tickets and restaurants from brands controlled by the Tata group.

In addition to the Tata Neu digital platform, consumer brands such as Croma, as well as loyalty programmes of various brands and digital payment services such as Big Basket, Croma, IHCL, Starbucks, Westside, Vistara and Tata Cliq, are also under the TDPL brand.

The app also offers membership services and financial products such as bill payments, loans and insurance.

Corporate filings show that TDPL spent close to Rs 12,000 crore in making the acquisitions. For the year ended March 2022, TDPL posted a total operating income of Rs 16.34 crore and a loss of Rs 1,122.88 crore.

Earlier Bloomberg News reported that Tata Group is planning to invest another $1 billion into its super app venture in a bid to improve its digital business. This is in addition to the $2 billion fund that Tata Group invested earlier this year.

The additional funding is expected to be channeled into Tata Digital Pvt and aims to propel Tata Neu's operational efficiency and user-friendliness, ensuring a more seamless digital experience.

If the talks are fruitful, it will mark the third instance in recent years where a Tata group company will welcome a private equity investor. In 2021, Tata Motors secured $1 billion from TPG Rise for its electric vehicle division and also divested a 9.9 per cent share in Tata Technologies to the private equity fund in October.