Mahindra may follow Tata Group, reduce stake in units to raise funds

Mahindra Group, the $18 billion conglomerate with businesses from India’s largest SUV maker to financial services and farm equipment, is prepared to pare stakes in its publicly traded units to facilitate fundraising by the companies.

The group is ready to cut its shareholdings in six listed entities to less than 51 percent, including Mahindra & Mahindra Financial Services Ltd., which has a market value of 210 billion rupees ($3.1 billion) — if the strategy they’re pursuing calls for it, Chief Financial Officer V.S. Parthasarathy said in an interview in Mumbai. Mahindra will also encourage unlisted group companies to tap private equities for investment and list on stock exchanges.

Mahindra’s readiness to loosen its reins is aimed at increasing stakeholder returns, a move that would benefit the group as a shareholder, Parthasarathy said. Such a shift in strategy would follow in the footsteps of India’s largest conglomerate Tata Group, which has been gradually reducing its stakes in listed companies.

“Mahindra Group will enable the group companies to pursue their growth strategies,” Parthasarathy said on Oct. 10. “They will not stand in the way of these companies accessing growth capital to enhance stakeholder value only on the grounds that the parent’s holding might be diluted.”

Mahindra India