BackHero FinCorp raises $267 mn in funds
This funding round is Apollo’s third investment in India after breaking up with ICICI Venture in 2020
PremiumHero FinCorp Ltd has raised ₹2,000 crore ($267 million) in growth capital from American private equity major Apollo Management and Hero MotoCorp, among others, the non-banking financial company (NBFC) said in a statement on Monday.
Apollo Global Management, committed ₹937 crore ($125 million) through its Hybrid Value Fund, while the parent, Hero MotoCorp, infused ₹700 crore ($94 million), it added.
“This fresh capital infusion will fuel our growth to $10 billion in assets, and enable us to serve over 15 million customers by FY25," said Abhimanyu Munjal, joint managing director and chief executive, Hero FinCorp. As a part of the transaction, Apollo will pick up a 9-11% stake in the NBFC.
Last week, Hero FinCorp received a deemed approval from anti-monopoly watchdog, the Competition Commission of India, for the deal.
As of 30 September 2021, Apollo had around $481 billion in assets under management. This is its third investment in India after breaking up with ICICI Venture in 2020.
In 2021, it invested around ₹1,500 crore in JSW Cement. It had invested $500 million in Piramal Finance’s AIF in 2020, said a report in The Economic Times.
Apollo’s India team is led by Utsav Baijal, who oversees the private equity and credit businesses.
“We are pleased to support Hero FinCorp through our Hybrid Value platform, helping the business accelerate its growth in an industry that we believe has significant tailwinds," said Matt Michelini, partner, head, Asia Pacific and co-head, Hybrid Value, Apollo.
Hero MotoCorp, the largest two-wheeler manufacturer in India, owns 40% in Hero Fincorp, while the Munjal family, the promoters, own a 30-35% stake. Other shareholders, including ChrysCapital, Credit Suisse, Apis Partners and some dealers of Hero MotoCorp hold the rest.
The fund raise was approved by the boards of both Hero MotoCorp and Hero FinCorp in January.
The capital will support the company’s growth strategy as it continues to expand its product offerings across retail, SMEs, and corporate loans.
The investment is subject to regulatory approvals, and is expected to close by April.
With the fresh capital infusion, the net worth of the company, which is rated AA+ by Icra and Crisil, will be ₹6,782 crore on a consolidated basis.
Founded in 1991, Hero FinCorp, formerly Hero FinLease Ltd, expanded its operations in 2012, and has since grown its loan book from ₹300 crore to around ₹30,000 crore.
It serves over seven million customers through 4,000 plus touchpoints, across more than 2,000 locations.
Hero FinCorp has a dedicated home finance arm, Hero Housing Finance, a 100% subsidiary, with an asset book of over ₹2,500 crore.
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