Hero FinCorp Gets SEBI Nod for ₹3,668 Crore IPO

The financial services business of the well-known two-wheeler brand Hero MotoCorp, Hero FinCorp, has cleared the regulatory hurdle with the Securities and Exchange Board of India (SEBI) and got the go-ahead to float its Initial Public Offering (IPO). The proposed public market listing is expected to mobilise ₹3,668 crore.

The regulatory clearance, in the parlance of SEBI, was received on May 22. This is a milestone progress after Hero FinCorp had filed its initial IPO documents with the market regulator in August. This development was reported with an update being noted with the regulator on Wednesday.

IPO Structure Detailed

As per the Draft Red Herring Prospectus (DRHP) presented by the company, the IPO will have two separate components:

A new issue of new equity shares by Hero FinCorp to raise ₹2,100 crore.

An Offer For Sale (OFS) of worth ₹1,568 crore, wherein certain current investor shareholders will offer part of their stake.

The shareholders participating in the Offer For Sale have been recognised as AHVF II Holdings Singapore II Pte. Ltd, Apis Growth II (Hibiscus) Pte. Ltd, Link Investment Trust (acting on behalf of Vikas Srivastava), and Otter Ltd.

Business Background and Capital Use

Hero FinCorp plans to use the capital raised through the fresh issue primarily to enhance its capital adequacy. The enhanced financial pillar is vital for the firm to help finance its future funding needs, specifically those pertaining to its core lending business.

Functioning as a Non-Banking Financial Company (NBFC), Hero FinCorp provides a broad range of financial products. Its products and services are particularly positioned to address primarily the retail and the micro, small, and medium enterprise (MSME) customer segments throughout India.

The company had assets under management (AUM) of ₹51,821 crore as of March 2024. Among these assets, the retail loan business lent a huge 65 per cent to the AUM, and the MSME loan segment contributed 21 per cent. 

Since the company's establishment in 1991, it has grown phenomenally in terms of reach, with a customer base that has risen to 1.18 crore as of March 2024.

Stock Exchange Details and IPO Advisors

Hero FinCorp's equity shares are to be listed on India's major stock exchanges, the BSE and the NSE.

A syndicate of major financial institutions will be the book-running lead managers for the forthcoming IPO. These members are JM Financial Ltd, BofA Securities India Ltd, HSBC Securities and Capital Markets (India) Private Ltd, ICICI Securities Ltd, Jefferies India Private Ltd, and SBI Capital Markets Ltd.

The regulatory clearance marks a key milestone for Hero FinCorp as it prepares for its entry into the public markets, seeking capital to fuel further growth and expansion across its lending operations.

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