Team Startupcity

• Hero FinCorp raises Rs 260 crore in a pre-IPO funding round, reducing its fresh equity issue size to Rs 1,840 crore.
• Major investors in the placement include Shahi Exports and RVG Jatropha Plantation, along with several high-net-worth individuals.
• The total IPO size is now Rs 3,408.13 crore, with regulatory approval from SEBI, and managed by a consortium of leading financial institutions.

Hero FinCorp, the financial services arm of Hero MotoCorp, has raised Rs 260 crore by way of pre-initial public offering (IPO) placement, thereby reducing the size of its proposed fresh equity issue.

On June 5, the firm signed investment agreements with 12 investors, issuing 18.57 lakh shares at Rs 1,400 a piece on June 13. This revision has reduced the fresh issue portion of the IPO to Rs 1,840 crore, from the earlier estimate of Rs 2,100 crore. When added to a Rs 1,568.13 crore offer-for-sale (OFS) by current shareholders, the IPO size now comes in at Rs 3,408.13 crore, which is Rs 260 crore lower than the previous Rs 3,668.13 crore estimate.

Among the key investors in pre-IPO placement were Shahi Exports and RVG Jatropha Plantation, bringing in Rs 69 crore and Rs 50 crore, respectively. Other investors were Mohan Exports (Rs 25 crore), AP Properties (Rs 22 crore), and a number of high-net-worth individuals and organizations, including Vivek Chaand Sehgal, Paramount Products, Tiger Laser Pte, and Virender Uppal, each subscribing for Rs 15 crore worth of shares.

In a public statement, the firm made clear that none of the new allottees, except Vivek Chaand Sehgal and Laksh Vaaman Sehgal, directors on the board of group entity Motherson Auto, are associated with the firm, its subsidiaries, promoters, or key managerial personnel.

Established in 1991, Hero FinCorp caters to retail, MSME, and institutional borrowers in India. With assets under management (AUM) of Rs 51,821 crore as of March 2024, the retail and MSME segments combined contributed 86%. Proceeds from the fresh issue will be utilized to augment its Tier I capital cushion to prepare for business growth and upcoming lending needs, the company said.

The OFS component will provide financial investors like AHVF II Holdings Singapore II Pte, Apis Growth II (Hibiscus) Pte, Link Investment Trust (on behalf of Vikas Srivastava), and Otter Ltd. with exit options.

Hero FinCorp rivals listed NBFCs like Bajaj Finance, Cholamandalam Investment & Finance Company, Poonawalla Fincorp, and Sundaram Finance. The firm had sought and received regulatory approval for its IPO from SEBI last month. The issue will be handled by a panel of lead managers comprising JM Financial, Axis Capital, BofA Securities India, HDFC Bank, HSBC Securities, ICICI Securities, Jefferies India, and SBI Capital Markets.