Hero Fincorp Filed DRHP For Its Upcoming IPO

Hero Fincorp Ltd., a prominent non-banking financial company (NBFC) and an associate company of Hero MotoCorp., has taken a significant step towards raising capital by filing its preliminary papers with the Securities and Exchange Board of India (SEBI). The company aims to generate up to Rs 3,668 crore through its initial public offering (IPO). This move is seen as a strategic effort to bolster its financial capabilities to meet future lending demands.

Details of the IPO

The IPO is structured as a combination of a fresh issue of shares worth Rs 2,100 crore and an offer-for-sale (OFS) component amounting to Rs 1,568 crore. According to the draft red herring prospectus (DRHP), the OFS will see investors such as AHVF II Holdings Singapore II Pte., Apis Growth II (Hibiscus) Pte., and Link Investment Trust and Otter Ltd. selling their shares. AHVF II Holdings holds a 10.34% stake, while Apis Growth has a 1.24% stake in Hero Fincorp. Several financial institutions, including JM Financial Ltd., Axis Capital Ltd., BofA Securities India Ltd., HDFC Bank Ltd., HSBC Securities and Capital Markets (India) Pvt., ICICI Securities Ltd., Jefferies India Pvt., and SBI Capital Markets Ltd., are serving as the book-running lead managers for this issue.

Utilization of Proceeds

The proceeds from the fresh issue will be primarily utilized to enhance the company’s capital base, which will support future funding requirements for its lending activities. Hero Fincorp intends to list its equity shares on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), thereby increasing its visibility and access to capital markets.

Business Overview

Hero Fincorp offers a wide array of financial products, mainly targeting the retail segment and micro, small, and medium enterprises (MSMEs). The company’s retail loan portfolio includes vehicle loans, personal loans, and mortgage loans. As of March 31, Hero Fincorp reported assets under management (AUM) totaling Rs 51,820.8 crore, with the retail and MSME loan verticals contributing 65.08% and 20.80% respectively to the overall AUM. The company’s robust product offerings and extensive market reach underscore its significant presence in the NBFC sector.

Conclusion: Hero Fincorp Ltd.’s decision to pursue an IPO reflects its strategic intent to strengthen its capital base and expand its lending capacity. By raising up to Rs 3,668 crore, the company aims to position itself for sustained growth and enhanced market presence. The successful execution of this IPO will further solidify Hero Fincorp’s standing as a leading player in the non-banking financial sector, leveraging its strong brand association and diversified financial product portfolio.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.