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Hero Fincorp, the non-financial arm of Hero Moto Corp, has filed a DRHP(Draft Red Herring Prospectus) with SEBI. They plan to raise Rs Rs 3,668 crore through an Initial Public Offering (IPO).
How are the funds going to be raised?
As per the DRHP Filings, the proposed IPO will have a fresh issue of Rs 2,100 crore and an Offer For Sale (OFS) of Rs 1,568 crore. This offer for sale will be made by investors who are their current shareholders.
The shareholders selling their shares are AHVF II Holdings Singapore II Pte. Ltd, Apis Growth II (Hibiscus) Pte. Ltd, Link Investment Trust (through Vikas Srivastava), and Otter Ltd.
What’s the purpose of raising new funds?
The NBFC wants to use this fund raised from fresh equity to enlarge its Tier 1 capital base for future lending requirements. Their current capital requirements are expected to grow and they plan to fund that through the NBFC’s growing assets and business.
About Hero Fincorp
Hero Fincorp is an NBFC which is a non-financial arm of Hero Moto Corp. The company is currently engaged in consumer finance businesses and commercial lending. Consumer Finance includes financing Hero MotoCorp Two Wheeler, Loyalty Customer Loans, and providing Loans against property.
They also provide SME & Commercial Loans like :
- Term Loan
- Project Finance
- Bill Discounting
- Machine Term Loan
- Acquisition Financing
- Working Capital Term Loan
- Medical Equipment Financing
- E-commerce Dealer Financing
- Working Capital Demand Loan
- Hero MotoCorp Dealer Financing
Hero Fincorp’s Current Shareholding.
Hero Motor Corp owns around 40 percent of the shares in Hero Fincorp. While the promotors i.e. Munjal Family hold around 35-39 %. The remaining stake is held by investors like Apollo Global, ChrysCapital, Credit Suisse, and some dealers of HeroMoto Corp.
It will be interesting to see how hero fincorp ltd unlisted shares react to this announcement in the next 2-3 months.
Hero Fincorp Financial Results FY 23-24
The Interest Income for FY 24 was Rs 6,977.3 Crore which is a 23% increase from the previous year’s interest income of Rs 5,663.69 crore.
The Profit After Tax (PAT) has grown by 24% from Rs 457.3 crore in FY23 to Rs 601.92 crore in FY24 indicating a significant profitable growth in operations for Hero Fincorp.
Their Basic EPS has also grown at the same rate of Rs 24% from 35.92 per share in FY 23 to Rs 47.28 per share in FY 24.
The Loan book of Hero Fincorp grew by 19.34 % from Rs 36213 crore in FY 23 to Rs 44,929 crore in FY 24.
This suggests an assertive growth in Hero Fincorp's lending operations and a potential upward demand for its products and services.
Hero Fincorp Improved Its Asset Quality
The Gross NPA has improved significantly in the last 3 years. On March 22, the gross NPA reached 7.94% which caused concern among investors as the asset quality was deteriorating. On March 23, the asset quality improved to 5.38%. By the end of FY 23-24, the Gross NPA reduced to 4.26%.
This signifies a huge positive trend in the enhancement of credit quality and risk management becoming more effective year after year. Hero Fincorp has made an effort to increase the financial health of its balance sheet.
Is Hero FinCorp A Listed Company?
Hero Fincorp Ltd is not a listed company, however, it is actively traded in the unlisted share market. With the increased operations and credit quality, investors have a gainful opportunity to invest in the current hero fincorp share price before its IPO.
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