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Business News/ Companies / News/  Bain to sell stake in Hero MotoCorp
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Bain to sell stake in Hero MotoCorp

Bain Capital, which holds a 8.6% stake in Hero, will sell up to half of its shares in open market transactions on Friday

The private equity firm is offering the Indian company’s shares in the indicative price band of `2,582 to `2,717 each. Photo: Ramesh Pathania/MintPremium
The private equity firm is offering the Indian company’s shares in the indicative price band of `2,582 to `2,717 each. Photo: Ramesh Pathania/Mint

New Delhi/Mumbai: Private equity firm Bain Capital India Pvt. Ltd will sell half of its 8.6% stake in Hero MotoCorp Ltd, India’s largest two-wheeler maker, for $393 million ( 2,330 crore).

Bain is offering 8.57 million shares under a block deal, which translates into 4.29% of outstanding share capital of the auto maker, according to a deal sheet seen by Mint.

Amit Chandra, managing director of Bain Capital India, declined to comment.

“Bain Capital has been an investor in Hero MotoCorp for over three-and-a-half years now," Brij Mohan Lall Om Prakash, the investment arm of the Brijmohan Lall Munjal-led Hero Group, said in a statement. “Typically financial investors like Bain Capital have a 3-5 year investment horizon and Bain has decided to partially monetise their investment now."

The deal will be closed in three months from Friday. Investors will be required to pay 0.25% brokerage commission, besides the securities transaction tax and service charges, according to the deal sheet.

The transaction is being brokered by Citigroup Inc. and the shares are to be offered in a range between 2,582 and 2,717 per share, a discount of 5% from Thursday’s closing price.

Hero’s stock rose 0.12% to 2,708.55 on Thursday, while the benchmark Sensex closed at 25,576.21 points, up 0.40%.

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 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.

“We target somewhere in the mid-20s kind of IRRs (internal rates of return) for any investments in that range. So it depends on how long we are going to hold the investments," Bain Capital Llc’s managing director Paul Edgerley, who sits on Hero’s board, said in a 2012 interview. “So it could be two-and-a-half times the money in four-five years."

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Published: 12 Jun 2014, 07:57 PM IST
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