Tata Play primed to be 1st Indian co to file confidential filing with Sebi for IPO

Stock market regulator Sebi is expected to issue guidelines on confidential IPO pre-filing – allowing pre-filing sans public announcement to help safeguard sensitive business information of issuers – in the next 7-10 days, legal experts aware of the development said.

The Securities and Exchanges Board of India (Sebi) has been looking to allow such filings and was to discuss the matter in its board meeting on September 30, they said.

The Tata Group direct-to-home (DTH) platform is looking to raise Rs 2,000-2,500 crore ($300 million approximately), largely to give part to full exit to partners such as Walt Disney Company, which inherited its stake in the venture as part of its global buyout of Rupert Murdoch’s 21st Century Fox business, and Temasek, people cited above said.

There will also be some primary capital raise for growth, they added.

“The idea is to be ready and be the first off the block once the new confidentiality guidelines come in,” said an official in the know requesting anonymity. “For some reason if it does not, then a normal listing route can be considered.”

Tata Play has already mandated five investment banks – Capital, Bank of America, Citi, Morgan Stanley and IIFL – as lead arrangers and book runners in the proposed issue, the sources said.

Tata Sons and Tata Play spokespersons declined to comment.

As pre the existing norms, for pre-filing of IPOs, companies need to make a public announcement that they have pre-filed offer documents with Sebi and exchanges. The issuer company also has to clarify that pre-filing doesn’t necessarily mean it will hold an IPO.

A confidential filing, as the moniker suggests, allows a company to privately file a registration statement for an IPO with the regulator for review, delaying the public filing until much closer to the actual IPO date.

The veil of secrecy aids a company to withhold sensitive information from competitors, customers, and employees until much further down the road; in some cases, it even gives the option to withdraw a registrations statement without alerting the public.

Such filings are popular in the US and Canada among technology company listings like Uber, Airbnb, and Snap as a few months of data confidentiality are considered significant for high-growth firms.

In the case of Tata Play, there are several regulatory and local legal wranglings, prompting the group to explore this route, people cited above said.

Opting to file confidentially – and under the radar – also helps a company to choose to go public at a time when both the company is primed and the market is most supportive. Since there is no public knowledge of the filing, there will be no questions asked, no media or investor scrutiny, and no rush to commit to a date.

Later, if the company indeed chooses to proceed with the offer, it can update its financials, Sebi’s observations and put it out in public domain.

Currently in India, a company has to file a draft offer document (DRHP) with the regulator which might help its rivals get a sneak peek. Approvals tend to come in by 30-70 days after filing the DRHP. An issuer may still drop the plans after undergoing the whole exercise, as ET reported in its September 29 edition.

Beginning in 2004, Tata Sky was an 80:20 joint venture between Tata Sons and Network Digital Distribution Services FZ-LLC (NDDS), an entity owned by Rupert Murdoch’s 21 Century Fox. Walt Disney Co acquired Fox in 2019 and owns another 9.8% stake in Tata Sky through TS Investments Ltd, where Fox owned 49% stake with Tata owning the rest.

Singapore’s Temasek acquired a 10% stake in Tata Sky in FY08 through Baytree Investments (Mauritius) Pte Ltd and in FY13, Tata Opportunities Fund and Tata Capital Ltd acquired stake in the company. Temasek is also a limited partner in Tata Opportunities fund.

Tata Sons has a 41.49% stake in the company.