Hero FinCorp files DRHP for IPO with SEBI

Hero FinCorp, the financial services arm of two-wheeler manufacturer Hero MotoCorp has filed its draft red herring prospectus (DRHP) with the capital market regulator, Securities and Exchange Board of India (SEBI), for an initial public offering (IPO) worth ₹ ₹3,668 crore.

Hero FinCorp is an non-bank financial companies (NBFC) that specialises in serving the retail and micro, small, and medium business (MSME) client sectors in India with a diverse range of financial products.

According to the DRHP submitted on Wednesday, the proposed IPO consists of an Offer For Sale (OFS) of ₹1,568 crore by investor shareholders and a new issue of equity shares valued at ₹2,100 crore.

AHVF II Holdings Singapore II Pte. Ltd, Apis Growth II (Hibiscus) Pte. Ltd., Link Investment Trust (via Vikas Srivastava), and Otter Ltd. are the entities offering shares in the OFS.

The company's capital will be increased using the proceeds from the new issuance in order to satisfy its future financial needs for lending activities.

The book running lead managers of the initial public offering are JM Financial Ltd, BofA Securities India Ltd, HSBC Securities and Capital Markets (India) Private Ltd, ICICI Securities Ltd, Jefferies India Private Ltd, and SBI Capital Markets Ltd.

Hero FinCorp is a company that operates under the well-known and established "Hero" brand. It benefits from the long-standing corporate legacy, solid performance history, and solid reputation of its parent and promoter, Hero MotoCorp Ltd.

As of March 31, 2024, Hero MotoCorp owned 41.19% of the firm and had spent a total of ₹1469.04 crore in equity capital and ₹700 crore in compulsorily convertible preference shares (CCPS) since the company's founding in 1991.

As per the company's DRHP the listed industry peers are Bajaj Finance Ltd (with a P/E of 28.77), Cholamandalam Investment & Finance Company (with a P/E of 34.36), Poonawalla Fincorp Ltd (with a P/E of 17.37), and Sundaram Finance Ltd (with a P/E of 33.88).

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