In the month of August 2023, Hero Fincorp came up with a futuristic approach to increase its value in the market. Hero Fincorp has interviewed domestic and international I Banks for raising INR 4,000 crore IPO in the coming months. This will be a great opportunity for the people associated with the company, especially its shareholders. This blog will discuss the insights of Hero Fincorp’s IPO plans and possible outcomes and effects.
Hero FinCorp, established in 1991 as Hero Honda FinLease Limited, has evolved into India’s leading credit provider. Following the restructuring of its parent company, Hero MotoCorp Limited, it became Hero FinCorp Limited. With nearly 2000 retail financing touch-points within Hero MotoCorp’s network and partnerships with over 2000 corporate clients, Hero FinCorp aims to make finance accessible to everyone. Their mission is to keep growing their services and reach across India while delivering exceptional financial solutions to people from all walks of life.
Hero Fincorp Performance History
Hero Fincorp, formerly known as Hero Finlease, has a long history spanning nearly three decades. Initially, the company focused on providing financial support to suppliers of Hero Honda. However, things changed in 2011 when Hero Honda Motors underwent a restructuring, leading to Honda’s exit as a joint venture partner.
Since 2013, Hero FinCorp has expanded its services to include financing for two-wheelers and has ventured into the SHE (Self-Help Groups) and corporate financing sectors. In 2017, the company obtained a license to operate in the housing finance business.
Under the leadership of Pawan Munjal, Hero MotoCorp, the parent company, Hero Fincorp, has recently reported impressive financial performance. For the quarter ending June 30 in the current fiscal year, they achieved revenues of INR 8,767 crore, marking a 4.5% increase compared to the previous year. This growth reflects the company’s commitment to evolving and serving the changing needs of its customers.
Hero Fincorp On Preparing Its Ipo With I Banks
Hero FinCorp, a subsidiary of Hero MotoCorp, India’s largest two-wheeler manufacturer, is considering an IPO and is discussing with investment banks for potential underwriters. Here are some key points to think about the IPO strategy of Hero Fincorp:
IPO Fundraising Target: Rs 4,000 Crore
According to sources, if the IPO goes as planned, it could raise approximately Rs 4,000 crore for Hero FinCorp.
Search for Investment Bank Partners
Hero FinCorp, which provides loans to individuals and businesses, has been actively interviewing around 7-8 domestic and international investment banks over the past two weeks. The company is close to finalizing its list of advisors for the IPO.
Valuation of Hero FinCorp
The anticipated IPO could potentially value Hero FinCorp at around $1.8 billion, which is approximately Rs 14,932 crore. In the fiscal year 2022-23, the company reported a book value of Rs 5,288 crore. This valuation represents about 2.8 times the company’s book value.
Reports from Moneycontrol suggest that Hero FinCorp shares are trading at Rs 1,210 each in the unlisted market, which is nearly 2.5 times the company’s book value. This would imply a market value of Rs 13,220 crore for the company.
Stakeholders in Hero FinCorp
Hero MotoCorp currently owns approximately 40% of Hero FinCorp, while the Munjal family, the promoter of the Hero group, owns around 30% of the company. The remaining shares are held by private equity investors like ChrysCapital, Apollo Global, Credit Suisse, Apis Partners, and dealers of Hero MotoCorp.
In January of the previous year, Hero MotoCorp and new and existing investors invested Rs 2,000 crore as equity in Hero FinCorp. After this round, Apollo Global became one of the company’s shareholders, valuing the financier at $1.4 billion (Rs 12,000 crore).
For the fiscal year 2022-23, Hero FinCorp reported interest income of Rs 5,363 crore and a net profit of Rs 457 crore. The company’s loan book stands at approximately Rs 36,000 crore, highlighting its robust financial position.
Effects On Hero Fincorp Unlisted Shares
As Hero Fincorp is ready with its solid plan of preparing for its IPO, so many factors made the company flourish so well that it reached this destination. With a net profit of 457 crore, the company is performing even better than in 2022 by marking a profit increase of 4.5% reported in June 2023. According to market experts, this is the right time to invest in Hero Fincorp unlisted shares, seeing the progress in its price in the previous months as well. Hero Fincorp’s involvement with international and domestic Investment banks may add the value of 4,000 crore to the company in the near future. This news is definitely an eye-opener for the people who are looking to invest in the grey market.