India's Tata Technologies Limited is in talks with Morgan Stanley Investment Management Inc., BlackRock, Inc. (NYSE:BLK) and some U.S hedge funds to invest in its initial public offering at a valuation of $2.5 billion, two sources with direct knowledge of the matter said. Part of conglomerate Tata Group (Tata Sons Private Limited), the company provides engineering services for companies in the auto and aerospace sectors among others. Its IPO will be the first in two decades for a Tata Group company, which has many listed businesses including in the auto and steel sectors.

Ahead of its planned $350 million - $375 million IPO, Tata Technologies is holding talks with U.S asset managers Ghisallo Capital Management LLC, Oaktree Capital Management, L.P. and Key Square Capital Management LLC, as well as Blackrock and Morgan Stanley (NYSE:MS) for possible participation in the deal. Oaktree declined to comment while Tata and the other investors did not respond to requests for comment. These funds are eyeing Tata's so called anchor book, where high-profile institutional investors are allotted shares before the subscription opens for retail and other investors.

Reuters is the first to report these investor talks and the valuation. "Big investors are quite excited by the Tata brand, and a profitable company with scale . that's driving demand," the first source said.

The talks are assessing Tata Technologies' valuation to be $2.5 billion now, around 25% higher than last month when TPG picked up a 9.9% stake in a pre-IPO fundraising. Tata's plan to sell a 14%-15% stake in the IPO is seeing "more investor interest than expected", the first source said, explaining the quick valuation uptick.