2 PE cos to pick up 29% stake in Hero Investments for Rs 3,650 cr

PTI New Delhi | Updated on March 21, 2011

Two private equity firms, BC India Investors II and Lathe Investment Pvt Ltd, will together pick up 29 per cent stake in Hero Investments Pvt Ltd (HIPL) — promoter of the country’s largest two-wheeler maker Hero Honda — for Rs 3,650 crore.

The Hero Group had earlier this month signed definitive agreements with the PE firms — BC India Private Investors II, an affiliate of Bain Capital LLC, and Lathe Investment Pvt Ltd, a wholly-owned subsidiary of state-run Singapore Investment Corporation (Ventures) Pvt Ltd — for the stake sale in HIPL.

“Subject to all necessary clearances, these two investors shall collectively invest around Rs 3,650 crore for approximately 29 per cent stake in HIPL, which will own 43.33 per cent of Hero Honda Motors post—acquisition of Honda’s stake,” a senior Hero Group official told PTI.

HIPL is one of the main shareholders in the country’s largest two-wheeler maker Hero Honda. It held 17.33 per cent stake in the company as of December 31, 2010.

Last month, the Foreign Investment Promotion Board (FIPB) had referred a proposal by the Hero Group to bring in Rs 4,500-crore foreign equity in HIPL to the Cabinet Committee on Economic Affairs for approval, as it involves an investment exceeding Rs 1,200 crore.

The BM Munjal-led Hero Group is to pay Rs 3,841.83 crore to buy out Honda’s 26 per cent stake in its joint venture Hero Honda.

The group said the funds raised from the PE firms will be used to retire a significant portion of the debt that has been raised by HIPL recently for financing the acquisition of Honda Motor Company’s stake in Hero Honda.

In December, the two companies mutually agreed to part ways in the 27-year-old joint venture, where the Indian partner also holds 26 per cent stake.

Published on March 21, 2011

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