Hero FinCorp raises Rs 260 crore in pre-IPO funding round

Hero FinCorp, the non-banking financial arm of Hero MotoCorp, has raised Rs 260 crore in a pre-initial public offering (IPO) placement, reducing the size of its planned fresh equity issue.

The company executed investment agreements with 12 investors on June 5, allotting 18.57 lakh shares at Rs 1,400 apiece on June 13. This move trimmed the fresh issue component of the IPO to Rs 1,840 crore, down from an earlier estimate of Rs 2,100 crore. Combined with a Rs 1,568.13 crore offer-for-sale (OFS) by existing shareholders, the total IPO size now stands at Rs 3,408.13 crore — Rs 260 crore short of the earlier anticipated Rs 3,668.13 crore.

Among the largest participants in the pre-IPO placement were Shahi Exports and RVG Jatropha Plantation, investing Rs 69 crore and Rs 50 crore respectively. Other investors included Mohan Exports (Rs 25 crore), AP Properties (Rs 22 crore), and a range of high-net-worth individuals and entities such as Vivek Chaand Sehgal, Paramount Products, Tiger Laser Pte, and Virender Uppal, each subscribing to Rs 15 crore worth of shares.

The company clarified in a public announcement that none of the new allottees — except Vivek Chaand Sehgal and Laksh Vaaman Sehgal, who are directors on the board of Motherson Auto, a group entity — are connected with the company, subsidiary, promoters, promoter group, directors, key managerial personnel, group companies and the directors or key managerial personnel of the subsidiary or the group company.

Founded in 1991, Hero FinCorp caters to retail, MSME, and institutional borrowers across India. It reported assets under management (AUM) of Rs 51,821 crore as of March 2024, with retail and MSME segments accounting for a combined 86%. The company said proceeds from the fresh issue will go toward bolstering its Tier I capital base in anticipation of business expansion and future lending needs.

The OFS portion will provide exits to financial investors including AHVF II Holdings Singapore II Pte, Apis Growth II (Hibiscus) Pte, Link Investment Trust (represented by Vikas Srivastava), and Otter Ltd.

Hero FinCorp competes with listed NBFCs such as Bajaj Finance, Cholamandalam Investment & Finance Company, Poonawalla Fincorp, and Sundaram Finance. It received regulatory approval for its IPO from SEBI last month.

The issue will be managed by a consortium of lead managers including JM Financial, Axis Capital, BofA Securities India, HDFC Bank, HSBC Securities, ICICI Securities, Jefferies India, and SBI Capital Markets.