Bain to sell another chunk of shares in Hero MotoCorp
Second shares sale by Bain in Hero MotoCorp this year; deal likely to conclude on Friday after markets open
Mumbai: Private equity firm Bain Capital’s Indian arm will sell another chunk of shares in Hero MotoCorp Ltd through the open markets, according to two people familiar with the deal. The transaction is being brokered by Deutsche Bank and is likely to be concluded when markets reopen on Friday. Indian markets were closed on Thursday for Guru Nanak Jayanti.
“They want to offload the block tomorrow," said one of the two people cited above. Bain Capital declined to comment.
The transaction was first reported by Reuters on Thursday morning. Bain Capital is selling nearly 4.3 million shares, at a price range of ₹ 2,859.58 to ₹ 2,963.30, in India’s biggest two-wheeler maker, reported Reuters citing the term sheet for the sale of shares.
If concluded, this would be the second time this year that Bain will sell shares in Hero Motocorp. On 13 June, Bain Capital sold 5.6 million shares in the two-wheeler maker for a sum of ₹ 1,481 crore, according to a PTI report.
As of 30 September, Bain Capital held 5.77% or 11.52 million shares in the company, according to stock exchange data. Bain Capital originally held 8.6% stake in the company.
“They got the mandate from the shareholders to sell 50% (of their shareholding). They sold one-third in June," said Ravi Sud, chief financial officer at Hero MotoCorp, when contacted on the phone. He declined to comment further as it is “an open-market transaction".
Bain Capital had invested $550 million ( ₹ 2,800 crore) in Hero Investment Pvt. Ltd in March 2011. The money, a part of the ₹ 4,000 crore that the private equity firm invested along with the Lathe Investment Pvt. Ltd—a unit of Government of Singapore Investment Corp. (Ventures) Pte Ltd—helped the Munjal family-controlled Hero group fund its purchase of Honda Motor Co.’s 26% stake in Hero Honda Motors Ltd, now renamed Hero MotoCorp.
With the company’s stocks having almost doubled from ₹ 1,450 on 25 March 2011, to ₹ 2,957.35 on Wednesday, analysts who spoke on condition of anonymity, said Hero Motocorp had delivered strong returns for the investor.
On Wednesday, Hero’s shares ended lower by 1.77% on BSE, while the benchmark Sensex closed at 27,915.88, up 0.2%. The surge in equity markets this year has led to a number of private equity investors exiting their holdings in public listed entities via market transactions.
According to JM Financial data research, PE funds sold $1.18 billion worth of investments through public market transactions between January and August this year. This accounted for 75% of the total exits by PE funds so far this year.
Over the same period last year, only 20% of total exits happened through the public markets, adding up to roughly $580 million.
Large PE funds such as Bain Capital, Baring Private Equity Partners India, Saif Partners, Multiples Alternate Asset Management Pvt. Ltd, ChrysCapital Management Co. and others also sold part of their investments through the public markets this year.
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