Posted by Dale Buss on April 20, 2012 11:01 AM
Tata Group long has been regarded as a great way to invest in the burgeoning economy and population of India, because the industrial conglomerate is the dominant business in that fast-growing country. But now, some investors are looking at Tata and its Jaguar Land Rover operation instead as a promising way to participate in the economic boom in China, in the commercial possibilities of Russia, and even in economic resurgence in the United States.
That's because Tata's $2.5 bilion purchase of the tattered Jaguar and Land Rover brands from Ford in 2008 has resulted in a turnaround of those venerable automotive enterprises — and has created rising expectations in the global investment community — as Bloomberg reports — that Tata will opportunize that progress with an IPO, floating an intial sale of shares in a reconstituted Jaguar Land Rover.
Jaguar Land Rover has made huge progress in the last couple of years by introducing new models — including the Jaguar XJ sedan, the Victoria Beckham-enhanced Range Rover Evoque compact SUV being revealed at the Beijing Auto Show on Sunday and the Jaguar XF sedan — and recording its highest monthly sales in March. Meanwile, Tata's own budget-level vehicle brands in India have suffered a bit lately becasue of slumping consumer confidence.
Jaguar also just announced (at the New York Auto Show) the 2013 launch of a new two-seater sports car called the F-Type.
Spurred by the comeback of Jaguar and Land Rover from Ford's relative neglect, Tata has been the second-best-performing auto stock globally this year. And while Tata so far has preferred to fund Jaguar Land Rover's renewal internally, some in the investment community believe the time is ripe for Tata to tap external capital (cue the IPO chatter) to fund its ambitious spending and expansion plans for the years ahead.
"By listing Jaguar Land Rover, Tata Motors will allow investors who aren't focused on India to invest in the company," commented Taina Erajuuri, a Helsinki-based money manager at FIM Asset Management, to Bloomberg. "The new models planned for [Jaguar Land Rover] require a large amount of investment."