Hero FinCorp, the non-banking financial company (NBFC) backed by Hero MotoCorp, has raised ₹310 crore in a pre-IPO private placement, ahead of its much-anticipated ₹3,668 crore initial public offering (IPO). The capital was secured through a preferential allotment of 22,14,277 equity shares at ₹1,400 per share, valuing the company at approximately ₹18,482 crore post-money. This move presents an opportunity for investors looking to buy unlisted shares and participate in the growth of a promising financial services player. With strong interest in the pre-IPO shares, Hero FinCorp is gearing up for its public debut, attracting both retail and institutional investors.
Key Highlights
- IPO Size: ₹3,668 crore (₹2,100 crore primary)
- Pre-IPO Raise: ₹310 crore via private placement
- Valuation: ~₹18,482 crore (post-money)
- Share Price: ₹1,400 (₹1,390 premium over face value)
Major Investors in Pre-IPO Placement
Despite rising bad loans and regulatory delays, Hero FinCorp attracted marquee investors:
- Shahi Exports – ₹69 crore
- Vattikuti Ventures – ₹50 crore
- RVG Jatropha Plantation – ₹50 crore
- Mohan Exports (India) – ₹25 crore
- Vivek, Laksh & Renu Sehgal Trust (linked to Motherson Sumi) – ₹30 crore
- A P Properties – ₹22 crore
- Paramount Products, Tiger Laser & Virender Uppal (Richa Exports) – ₹15 crore each
- LC Hercules (Cayman) – ₹10 crore
- Yugal Chit Fund & Trading – ₹9 crore
The robust investor turnout highlights strong long-term belief in Hero FinCorp’s business model, even as near-term challenges loom.
SEBI Delays Hero FinCorp IPO Approval
Hero FinCorp filed its Draft Red Herring Prospectus (DRHP) in July 2024, planning a ₹3,668 crore IPO. However, SEBI approval is still pending, reportedly due to a regulatory breach under review. The IPO includes a ₹2,100 crore primary issue aimed at boosting Tier-I capital and expanding lending operations.
Current Roadblocks:
- Rising Non-Performing Assets (NPAs)
- 80% YoY spike in loan write-offs to ₹2,180.9 crore in Q1 FY25
- Declining profitability
- Regulatory scrutiny delaying IPO clearance
Offshore Strategy: USD 200 Mn Loan to Strengthen Balance Sheet
While awaiting IPO clearance, Hero FinCorp is exploring offshore debt options, including a $200 million (~₹1,694 crore) syndicated loan led by DBS Bank. A recent roadshow in Taipei aimed to drum up institutional interest. This strategy mirrors moves by other Indian NBFCs, such as Piramal Finance, which raised $150 million in 2024.
Market Sentiment & Strategic Outlook
Hero FinCorp’s successful pre-IPO raise, even amid rising NPAs and profit pressures, indicates investor confidence in its long-term potential. However, its public market valuation will largely depend on:
- Timely SEBI approval
- Improvement in asset quality and profitability metrics
- Impact of offshore debt on leverage and capital adequacy
According to GrowFast Securities and Credit Pvt Ltd, a financial research and advisory firm, “Hero FinCorp has demonstrated strong institutional support, but it must now focus on improving credit quality and navigating SEBI’s concerns to unlock maximum value at listing.”
Conclusion
The ₹310 crore pre-IPO funding is a significant milestone for Hero FinCorp, offering much-needed capital and breathing room. However, with its IPO plans on hold and asset quality concerns growing, the journey ahead remains challenging.
Hero FinCorp’s IPO success will hinge on regulatory clarity and operational improvements—until then, the company is in a race to stabilize.
For any investment-related queries or to learn more about buying pre-IPO shares or other unlisted shares, please feel free to contact GrowFast Securities and Credit Pvt. Ltd. for expert advice and assistance.
Contact Us: +91 98 1111 9970
Visit: https://growfastsec.com
Sorry, the comment form is closed at this time.