Tata Sons, the holding company of the Tata Group, will be selling 2.34 crore shares or 0.65 per cent equity of Tata Consultancy Services through a block deal for ₹9,362.3 crore ($1.13 billion).

According to the term sheet, seen by businessline, the floor price of the deal has been fixed at ₹4,001 a share, a discount of 3.65 per cent to the closing price of TCS today. The deal will likely take place on Tuesday, sources said. JP Morgan and Citigroup are joint book runners to the deal.

According to the December-end filing, Tata Sons holds a 72.38 per cent stake in TCS.

Holding companies and promoter entities usually sell stakes in group firms to generate cash to pay down debt and stabilise balance sheets. Recently, British tobacco company BAT Plc sold a 3.5 per cent stake in its Indian associate ITC Ltd for ₹16,690 crore. This monetisation was done chiefly to buy back its shares and continue its deleveraging exercise.

Tata Sons had a net debt of ₹20,642.47 crore as on March-end 2023, while its revenue in FY23 was ₹35,058.47 crore. The market capitalisation of the Tata Group crossed ₹30-lakh crore last month from ₹20.7-lakh crore at the end of March last year.

It is a core investment company registered with the Reserve Bank of India and has also been categorised as an upper-layer NBFC. Under RBI guidelines, it must list its shares next year.

Shares of TCS have risen nearly 32 per cent over one year.

Commenting on the proposed transaction, Nuvama Alternative & Quantitative Research said that Tata Sons’ stake reduction in TCS would have no change in float and no flow impact on the MSCI Index. Adjustments in float at later dates can be expected for the Nifty50, Sensex and FTSE indices, resulting in a collective flow of $120-130 million.

This is the second major block deal this month after BAT Plc and Interglobe Aviation, in which Rakesh Gangwal sold a stake for ₹6,787 crore.