Tata Sons Sells TCS Stake Worth $1.25 Billion, TCS Shares Tank 6%

Tata Group- File

Tata Group- File

Tata Consultancy Services share price posted the biggest single-day fall in percentage terms in over last three years after a block deal in opening trade on Tuesday.

Citigroup and Morgan Stanley are managing the TCS share sale.

Tata Sons was looking to sell around 2.83 crore shares amounting to about 1.48 percent stake in TCS, the sources added. The price range represents a 4.2 percent to 5.9 percent discount to its last close. According to Motilal Oswal, these trades are done on a special window that opens for 35 minutes in the morning trading hours.

Tata Sons is expected to use these funds for other group activities, including debt reduction objective. Tata sold Tata Teleservices Ltd.'s mobile-phone operations to Bharti Airtel Ltd. a year ago and pledged to pay the unit's obligations.

The holding company is also seeking a $1.5 billion offshore syndicated loan, as it seeks to pay down expensive debt at its telecommunications unit, people familiar with the matter said last week. The Group is clearly in a hurry to exit its troubled mobile telephony business.

The sources said Tata Sons intends to use the proceeds from the share sale to reduce debt in the group's telecom arm Tata Teleservices which has debt of around Rs 40,000 crore. Tata Steel is reportedly the highest bidder for both bankrupt companies with a total debt of Rs 60,000 crore. After the block deal, Tata Sons will hold about 73% in TCS, which generated $18 billion in revenues in fiscal 2017.

TCS, the top Indian software services exporter, is the second-most valuable company in the country with a market capitalization of close to $90 billion.

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