Hero FinCorp, an arm of India's largest two-wheeler maker, Hero MotoCorp, has interviewed investment banks over the past two weeks as it searches for underwriters for a planned initial public offering (IPO) of shares that could raise ₹4,000 crore, a report by Economic Times stated, quoting people aware of the matter.
According to the report, the financing arm of the two-wheeler maker that provides retail and business loans has interviewed 7-8 investment banks that include domestic and international players. It could finalise the list of advisers soon, according to people in the know, as per the report.
The ET report, citing sources, further mentioned that the proposed IPO could value the non-bank finance lender at $1.8 billion or nearly ₹14,932 crore. Hero FinCorp had a book value of ₹5,288 crore at the end of 2022-23 and the valuation being sought is about 2.8 times the company's book value, informed the market daily.
Hero MotoCorp did not respond to ET's queries, it said.
Hero MotoCorp owns around 40 percent stake in Hero FinCorp. The Munjal family, the promoter of Hero group, owns about 30 percent stake. The company's most recent funding took place in January last year when Hero MotoCorp and new and existing investors pumped in ₹2,000 crore as equity. Apollo Global joined the company's list of shareholders after that round, which valued the financier at $1.4 billion or ₹12,000 crore, it observed.
"This is a good time for non-bank finance companies to tap the equity market. SBFC Finance and Utkarsh Small Finance Bank both listed successfully. Investors are exuberant about the sector," a senior investment banker told ET on condition of anonymity. Hero FinCorp posted an interest income of ₹5,363 crore for 2022-23. It had a net profit of ₹457 crore. Hero FinCorp's loan book is around ₹36,000 crore, said the report.
The company was originally known as Hero Finlease and has been in existence for almost three decades. After 2013, Hero FinCorp forayed into financing of two-wheelers and expanded in the SME and corporate financing segment. It also obtained a housing finance business licence in 2017, added the report.