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International Finance Corporation to invest ~700 Crores of investment in Hero Fincorp secured debt

Private sector unlisted lender, Hero Fincorp, is planning to raise funds via debt. The Hero Group NBFC has tapped capital markets for the purpose. Hero fincorp is expected to expand its loan book across its business verticals.

International Finance Corporation (IFC) is planning to invest ~700 Crores in the secured debt of Hero Fincorp, belonging to the Hero Group. Covid-19 pandemic has wreaked havoc on the NBFC sector, which is ailing since the IL&FS crisis. Cash starved companies are constantly raising capital to deploy funds.

The company will also deploy three times its loan amount, through its own resources and other sources of funding, towards the same target beneficiaries over the next three years, IFC added.

Hero Fincorp is a NBFC firm primarily focussing on two-wheeler (37%) and pre-owned cars financing (7%). Loans to corporates (18%) and micro, small and medium enterprises (21%) also contribute majorly in the company’s portfolio.  Personal loans (11%) and home loans (6%) contribute to the remaining share.

The shareholders of Hero Fincorp include Hero MotorCorp Limited (41.2 per cent), investment companies of the Munjal family (38.3 per cent), Credit Suisse (2 per cent), Chrys Capital (10 per cent) and Apis Growth (2 per cent) and HFCL’s dealers/employees (6.5 per cent).

The company has been rated as AA+ / stable by rating agencies such as CRISIL and ICRA. The company was launched in 1992 as Hero Honda Finlease. However, restructuring of the joint venture (JV) between Hero Motocorp and Honda Motors, led to renaming of the company as Hero Fincorp.

Hero Finocorp brags over its Pan India network providing hassle free loans. It has a distinguished network of up to 950 dealerships available at over 4,000 touch points across 1,900 cities, towns and villages of the country.

In FY19-20, Hero-Fin Corp crossed a milestone of covering 50 Lakhs customers, network at 2000 locations, and registered a growth of 40% in loan disbursement compared to previous year.

In FY 2019-20, the company clocked total revenue of Rs 3,663 crore, a jump of up to 47% compared to revenue of Rs 2,492 crore during FY 2018-19. The Profit after Tax (PAT) surged 16 per cent Rs 310 crore in FY 2019-20, which was Rs 268 crore in FY 2018-20.

The company has managed a revenue of Rs 1,814 crore and PAT of Rs 122 crore till six months ended on September 30, 2020. The company boasts a handsome dividend yield of 25% during the fiscal ending on March 31, 2020, with a net worth of Rs 4,527 crore.

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