Hero FinCorp’s ₹4,000 Crore IPO to Unlock New Growth Avenues

Hero FinCorp, Hero MotoCorp's finance arm, unveils ₹4,000 crore IPO comprising fresh equity issue and offer for sale by existing shareholders to fuel growth plans.

In a major move, Hero FinCorp, the financial services subsidiary of the country’s leading two-wheeler manufacturer Hero MotoCorp, has announced plans to launch an initial public offering (IPO) worth a staggering ₹4,000 crore. The much-awaited IPO will comprise two components – a fresh issue of equity shares totaling ₹4,000 crore, as well as an offer for sale by certain existing shareholders seeking to offload a portion of their holdings.

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The decision to take Hero FinCorp public was formally approved by the company’s board of directors during a meeting held on May 29, 2024. Through this IPO, the non-banking financial company aims to raise fresh capital for future growth and expansion, while also providing an exit opportunity for some of its current investors.

Headquartered in India, Hero FinCorp is a diversified financial services provider offering a wide range of products, including two-wheeler loans, educational loans, small and medium enterprise (SME) financing, working capital loans, loans against property, bill discounting, and leasing services. The company boasts an extensive network, with a presence in approximately 2,000 retail finance touchpoints within the Hero MotoCorp ecosystem, as well as operations spanning over 4,000 cities and towns nationwide.

Interestingly, reports from October 2023 had already hinted at the potential size of Hero FinCorp’s IPO, pegging it at around ₹4,000 crore. These reports also shed light on the company’s ownership structure, with the Munjal family, the promoters of Hero FinCorp, holding approximately 35-39% stake, while private equity firms such as Apollo Global, ChrysCapital, Credit Suisse, and some Hero MotoCorp dealers collectively own the remaining shares. Additionally, Hero MotoCorp itself controls a significant 40% stake in Hero FinCorp.

On the day of the IPO announcement, Hero MotoCorp’s shares experienced a dip, closing at ₹5,136.10 on the Bombay Stock Exchange (BSE), down by ₹50.75 or 0.98%. Despite the recent lacklustre performance, technical analysts remain optimistic about the stock’s prospects, suggesting that a breach of the ₹5,250 level could potentially reignite momentum, propelling the stock towards ₹5,500 and ₹5,650, with ₹5,000 serving as an immediate support level.

The ₹4,000 crore IPO of Hero FinCorp is undoubtedly a significant milestone for the Indian financial services industry, and it is expected to garner substantial attention from investors across the country and beyond.

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