Private placement by Hero-Fin Corp valuing company at Rs.820 per share- 04.01.2020

Hero-Fin Corp( HFCL ) is looking to raise ~Rs.1000 Crores by a way of preferential allotment through a private placement at Rs.820 per share to following investors. The company is issuing total 1,31,09,753 Equity shares.

(i) Hero MotoCorp Limited = 53,99,319 Equity Shares

(ii) Hero InvestCorp Private Limited = 1,46,342 Equity Shares

(iii) Bahadur Chand Investments Private Limited = 26,82,927 Equity Shares

(iv) RK Munjal and Sons Trust = 7,90,394 Equity Shares

(v) Pawan Munjal Family Trust = 7,90,394 Equity Shares

(vi) Survam Trust = 2,43,905 Equity Shares

(vii) Otter Limited = 8,24,405 Equity Shares

(viii) Link Investment Trust = 12,544 Equity Shares

(ix) Credit Suisse (Singapore) Limited = 1,70,732 Equity Shares

(x) APIS Growth II (HIBISCUS) PTE. LTD. = 20,48,781 Equity Shares

The valuation report is prepared by CMA Rajendra  Kumar Joshi and the date of valuation is 30.11.2019.

HFCL is a Non-Banking Finance Company (“NBFC”) engaged in providing financial services in India. The Company was incorporated in 1991 and is based in New Delhi, India. Hero MotoCorp Limited (“HMCL”) holds 41.18% stake in HFCL.

The Company provides two-wheeler financing and a bouquet of other financial products including used car financing, personal loan, inventory funding, loan against property, loans to Small and Medium Enterprises (“SMEs”) and emerging corporates.

UnlistedZone Take:

The company has shown tremendous growth in the last 5 years. In 2015-16, the company had revenue of Rs.772 Crores which has reached Rs.2492 Crores in FY18-19. More detail can be accessed at Link

Price to Book multiple is the tool to gauze the valuation of financial companies.

Let us see how Hero-Fin Corp fairs up?

Book Value ( FY18-19 ) = 321 per share. On the basis of the book value and price of Rs.820 per share( as per valuation report ), the P/B stands at 2.55x. We are expecting the P/B of 350 in FY19-20, on that basis, the P/B stands at 2.34x.

The stock currently is available in the unlisted market at Rs. 1025 per share. So on that basis, in the unlisted market, the share is available at P/B multiple of 3.19x, which is fair considering the growth shown by the company.