Ahead of its much awaited INR 3,668 crore IPO, Hero FinCorp, the non-banking financial company (NBFC) promoted by Hero MotoCorp, has raised INR 310 crore through a Pre-IPO private placement. The equity issuance was done via a preferential allotment of 22,14,277 equity shares at INR 1,400 per share, valuing the company at approximately INR 18,482 crore post money.
Hero Fincorp Pre-IPO: Investors
Despite rising bad loans, decline in profits and delay in regulatory approvals, Hero FinCorp’s private placement saw strong interest from marquee investors.
Key investors in the round are:
- Shahi Exports – INR 69 crore
- Vattikuti Ventures – INR 50 crore
- RVG Jatropha Plantation – INR 50 crore
- Mohan Exports (India) – INR 25 crore
- Vivek, Laksh, and Renu Sehgal Trust (link to Motherson Sumi) – INR 30 crore
- A P Properties – INR 22 crore
- Paramount Products, Tiger Laser, and Virender Uppal (Richa Exports) – INR 15 crore each
- LC Hercules (Cayman) – INR 10 crore
- Yugal Chit Fund & Trading – INR 9 crore
The shares were issued at a premium of INR 1,390 over the face value of INR 10 per share, indicating investor confidence in the company’s long term prospects despite current challenges.
Hero FinCorp IPO Plans in Limbo as SEBI Scrutiny Continues
Hero FinCorp had filed the DRHP in July 2024, targeting a INR 3,668 crore IPO which includes a INR 2,100 crore primary issue. The company plans to use the proceeds to strengthen its Tier-I capital and fund future lending. However the IPO is yet to get the nod from SEBI. According to sources, SEBI is reviewing “some breach of rules” before giving the final approval, delaying what would be one of the year’s biggest financial services listing.
NPAs and Profitability Deteriorating
The pre-IPO capital infusion comes at a time when Hero FinCorp is facing credit risk. Loan write-offs have jumped 80% YoY to INR 2,180.9 crore in Q1 FY25. Loan write-offs. The company has to be more. The company’s total assets under management (AUM) stood at INR 53,642 crore as of September 2024 with exposure across personal
With the IPO timeline uncertain, Hero FinCorp has also gone to the offshore debt markets to strengthen its balance sheet. The NBFC is raising a USD 200 million (~INR 1,694 crore) syndicated loan with DBS Bank as the lead. A roadshow was held in Taipei recently to drum up interest. This is similar to what other Indian NBFCs like Piramal Finance did, which raised USD 150 million at 7.078% in 2024.
Market Outlook and Strategic Takeaway
Hero FinCorp’s ability to raise INR 310 crore in a tough market shows investors believe in the business long term. But delays in IPO approval, deteriorating asset quality and declining profitability will weigh on its valuation in the public markets.
Hero Fincorp IPO will succeed on two factors: SEBI approval and improvement in asset quality and profitability numbers before listing. Investors will also watch how the USD 200 million debt raise impacts the company’s leverage and capital adequacy going forward.
In short, Hero FinCorp pre-IPO funding is a big deal for the company, the road to IPO is still bumpy. For no, the company has bought time and capital to stabilise before facing public market scrutiny.
In short, the pre-IPO funding is a big deal for Hero FinCorp but the road to IPO is bumpy. For now, the company has bought time—and capital—to stabilise before facing public market scrutiny