Hero Fincorp Limited (HFCL), India’s reputed non-banking finance company, is set to raise Rs 2000 crore. It has invited new investors to raise the amount, in which Apollo Global Management, which is US-based private equity, is the biggest name disclosed. Hero MotorCorp, the parent company of Hero Fincorp, confirmed that “Apollo Global Management has committed Rs 937 crore ($125 million) through its hybrid value fund.”
In addition, the officials of Hero Fincorp said, “Hero MotoCorp has put in Rs 700 crore($94 million), and other investors put in the rest of the money to help it raise Rs 2000 billion funding.” According to the sources, HFCL needs this funding to expand its business operations, and for this, it has invited new investments from private equity firms. Hero Fincorp provides financial services to retail and corporate customers through two-wheeler financing, working capital loans, term loans, leasing, bill discounting, and more.
The decision to raise new funds revolves around the need of the company to expand business operations. However, some experts also believe bringing new investment may be a sign that Hero Fincorp is preparing for an IPO. HFCL is an unlisted company, and Hero Fincorp unlisted shares are actively traded in the Pre-IPO market. The reason behind raising billions of rupees can be different and indicates that investors may expect Hero Fincorp’s IPO soon in the future.
Apollo Will Invest Rs 937 Crore In Hero Fincorp
Apollo Global Management is the name that comes at the top of the investor list, a US-based private equity firm that will invest Rs 937 crore($125 million) in Hero Fincorp. It is Apollo’s third investment in India after its breakup deal with ICICI Venture. The firm has already invested $200 million in JSW cement and $500 million in Piramal finance.
Apollo got approval from the Competition Commission of India(CCI) last week and will likely pick up the 9-11% stake in Hero Fincorp. As per the report, it currently has $481 billion in assets under management. Matt Michelini, Head of Asia Pacific & Co-head of Hybrid Value at Apollo, said, “We are pleased to support Hero FinCorp through our Hybrid Value platform, helping the business accelerate its growth in an industry which we believe has significant tailwinds in India.”
Why Does Hero Fincorp Invite New Investments?
You might wonder why Hero Fincorp is raising new investments at this stage. It is the subsidiary of India’s largest two-wheeler company Hero MotorCorp which is well-established. There could be different reasons behind it; one is HFCL’s intention to expand business operations. Here are the prominent reasons behind Hero Fincorp’s decision to seek new investment:
1- Boosting Business Growth
The board of Hero MotorCorp and Hero Fincorp approved the recent fundraising round. It is currently in talks with investors to raise Rs 2000 billion to expand its business operations and serve more than 15 million customers by the end of FY 2025. According to the sources, HFCL is currently struggling to meet the financial demands raised after the pandemic and the high two-wheeler sales of Hero MotorCorp.
Abhimanyu Munjal, CEO and Managing Director of Hero FinCorp said, “This fresh capital funding will fuel our growth to $10 billion in assets and enable us to serve over 15 million customers by FY25. It also helps us empower every Indian’s dream of upward mobility.”
2- Improves Product Offering
Hero Fincorp intends to cover the different sectors with its financial services. HFCL officials believe that to achieve the company’s mission of reaching 15 million customers, it needs improvement in the product offering. In this light, the new investment can prove futile and support Hero Fincorp’s future product and service development process. The company plans to expand its product offering across India’s SMEs in the next five years.
3- Preparing For Initial Public Offering(IPO)
Since Hero Fincorp is a private limited company, the new investment can also mean that it starts preparing for an IPO. The fresh capital infusion will increase the company’s net worth and bring it under the AA+ rating. After the funding round, the expected net worth of the HFCL will be Rs. 6782 crores ($900 million). Moreover, the board of Hero Fincorp is also considering maintaining the company’s finances to prepare for an IPO.
Why Is Investing In Hero Fincorp Pre-IPO Stocks Beneficial?
Hero Fincorp is India’s leading non-banking financial company and a subsidiary of two-wheeler giant Hero MotorCorp. The company has yet to announce its IPO. However, Hero Fincorp unlisted shares are available for trading and perform exceptionally well on the grey market. If you seek an investment that involves less risk and offers a good return, unlisted shares of HFCL can be your best bet. Let’s look at the details of HFCL unlisted shares:
| Hero Fincorp Unlisted Shares | Details |
| Face Value | Rs 10 per equity share |
| Lot Size | 25 shares |
| Total Availability of Shares | 4000 |
| Current unlisted share price | Rs 850 per equity share |
| ISIN | INE957N01016 |
The performance of the unlisted shares depends on the market condition, which is why the price of Pre-IPO stocks fluctuates. That is why investors must look at the company’s financial report before investing in unlisted shares. Here is the financial report of Hero Fincorp limited:
| Particulars (in cr) | FY22 | FY22 |
| Operating Revenue | 4,046 | 4,441 |
| Revenue Growth | 10% | 10% |
| PAT | -195 | 71 |
| Networth | 4838 | 5042 |
| NPM | 57% | 68% |
| EPS | -15.25 | 5.78 |
As the above table shows, the financial performance of HFCL has improved in the last few years. It reflects in Hero Fincorp unlisted share price, which is currently traded at Rs 1025 in the Pre-IPO market.
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