Hero Fincorp eyes IPO after raising funds from associate concerns and others

Hero Fincorp, the finance arm of two-wheeler major Hero Motocorp, is eying to float its initial public offering (IPO) soon as the company successfully completed a funding round of Rs 2,000 crore recently. Hero MotoCorp, its sister concern and US based private equity major Apollo Management participated in the latest fund-raising round undertaken by Hero FinCorp. Prior to this Hero Motocorp owned over 41 per cent stake in Hero Fincorp. If listed, the NBFC will be the second entity from India's leading conglomerate Hero Group to make debut on the bourses. Only Hero Motocorp, the largest manufacturer of two-wheelers, is listed on the exchanges so far.

Hero Fincorp returned to black in the December 2021 quarter as the company reported a profit after tax of Rs 133.34 crore in the as against a net loss of Rs 196.45 crore in the corresponding period previous fiscal. Hero Fincorp is engaged in the business of consumer finance and commercial lending. Its wholly owned subsidiary - Hero Housing Finance Limited - is engaged in the business of providing housing loans. The company has been rated as AA+ and stable by rating agencies such as CRISIL and ICRA.

Incorporated in 1992 as Hero Honda Finlease Limited, Hero Fincorp changed its name after the 'Hero Honda' was completely owned by Hero Motocorp after the exit of Honda Motor Company from the joint venture of the two. The vehicle financier  reported a marginal rise of 7.5 percent in the total income from operations to Rs 1,151.53 crore in third quarter of the ongoing fiscal as against Rs 1,070.44 crore in the same period previous year.

Hero MotoCorp’s Pawan Munjal, who is also the chairman of Hero FinCorp, and his extended family hold nearly 10 per cent in the NBFC in individual capacity. The family’s investment firm Bahadur Chand Investments holds over 20 per cent. Apollo is estimated to have picked up a 9-10 per cent stake in the funding round held in the previous month. Mauritius-based Otter Limited has a significant minority stake of 10 per cent in Hero FinCorp,  whereas ChrysCapital, Credit Suisse and Apis Partners are the other investors in the NBFC.

At present, the company has close to 2000 retail financing touch-points across Hero MotoCorp's network, and have partnered with over 2000 satisfied corporate clients. The company marks its presence at more than 1,000 dealerships spread across 1,900 cities, towns and villages. Hero Fincorp has a wholly owned subsidiary, Hero Housing Finance has shown a robust growth in the last few years. In the first year of its operations, FY 2018-19, the company disbursed loans worth Rs 556.75 crore to the customers. Hero Fincorp had invested Rs 200 crore in Hero Housing Finance by subscribing 20,00,00,000 equity shares of face value of Rs 10 each on the rights basis.