Hero FinCorp files papers for Rs 3,668 crore IPO

Non-banking finance company Hero FinCorp Ltd, promoted by India’s largest two-wheeler maker Hero MotoCorp, has filed a draft red herring prospectus (DRHP) for an initial public offering (IPO) worth Rs 3,668.1 crore.

The issue will be a combination of a fresh issue of shares and an offer of sale by some existing shareholders. The company plans to raise up to Rs 2,100 crore by issuing new shares while existing investors will raise up to Rs 1,568 crore by selling their shares.

Hero FinCorp, incorporated in 1991, provides financial services, including two-wheeler financing and credit to Hero MotoCorp’s vendors and suppliers. Over the years, it has added several new products and customers to its portfolio, like small and medium enterprises, commercial loans, and loans against property.

The company will offer equity shares with a face value of Rs 10 per share and plans to trade them on both BSE Ltd and the National Stock Exchange of India Ltd. Hero MotoCorp is the largest shareholder in Hero FinCorp with a stake of 39.6%, followed by Bahadur Chand Investments with a 15.7% stake.

AHVF II Holdings Singapore II Pte Ltd, Apis Growth II (Hibiscus) Pte Ltd, Link Investment Trust (through Vikas Srivastava), Otter Ltd are the existing investors that will offload their share in the issue.

The company will use the entire proceeds of Rs 2,100 crore to augment its tier-1 capital base to meet future capital requirements towards onward lending, arising out of the business expansion.  

“We offer retail, MSME and CIF loans. As an NBFC, we are subject to regulations relating to capital adequacy, which determine the minimum amount of capital we must hold as a percentage of the risk-weighted assets on our portfolio and of the risk-adjusted value of off-balance sheet items, as applicable,” the company noted.

For the financial year 2024, the company reported a consolidated net profit of Rs 636.78 crore, up from Rs 479.8 crore in the financial year 2023. Revenue from operations rose to Rs 8,290.9 crore from Rs 6,401.6 crore. Its net interest margin stood at 9.4%, slightly down from 9.5% on a year-on-year basis.