Hero FinCorp Shortlists 8 Investment Banks for Its Mega IPO

Hero FinCorp’s Journey to a Transformative IPO: UBS and Investment Banks Leading the Way

Hero FinCorp, the financial services subsidiary of Hero MotoCorp, one of India’s most prominent two-wheeler manufacturers, is gearing up for a game-changing event in the financial world.

The company has recently shortlisted eight investment banks in preparation for its highly-anticipated mega Initial Public Offering (IPO) scheduled for 2024.

This significant development is poised to reshape the landscape of financial services and provide investors with an opportunity to participate in the growth and success of Hero FinCorp.

The decision to go public is a significant milestone for Hero FinCorp. This subsidiary of Hero MotoCorp, a powerhouse in the Indian automotive industry, has been a key player in the non-banking financial sector since its inception in 1991.

Over the years, Hero FinCorp has provided financing solutions to a wide range of retail and corporate customers, offering services such as two-wheeler financing, term loans, working capital loans, bill discounting, and leasing. Its broad spectrum of financial products and services has made it a formidable player in the financial services sector.

One of the key aspects of this forthcoming IPO is the selection of eight investment banks to guide Hero FinCorp through this complex and exciting journey.

The chosen advisors are JM Financial, BofA Securities, Jefferies, ICICI Securities, HSBC Securities, UBS, SBI Capital, and HDFC. Their role is pivotal in ensuring the success of the IPO, and their selection reflects the company’s commitment to making this a resounding achievement.

The inclusion of UBS, a global financial giant that recently completed the acquisition of Credit Suisse in June 2023, adds a significant layer of expertise to the consortium.

The decision to go public and the selection of these investment banks signifies a momentous shift for Hero FinCorp, opening up new avenues for growth and expansion.

This IPO is expected to have a mixed structure of primary and secondary shares, allowing the company to raise capital for its future endeavors while providing an exit route for certain investors.

The company aims to raise around Rs 4,000 crore through this IPO, although this figure is subject to change based on market conditions and investor strategies.

The significance of this IPO extends beyond its financial implications. It represents a substantial transformation in the way Hero FinCorp operates and grows.

This IPO will enable the company to tap into the vast pool of capital available in the public markets, which can be utilized to fund expansion plans, research and development, and various growth initiatives. Additionally, it will provide liquidity to existing investors, giving them an opportunity to realize the value of their investments.

However, the IPO journey is not without its complexities and challenges. The company and its chosen investment banks will need to navigate a dynamic and often unpredictable market landscape.

The success of the IPO will depend on numerous factors, including market conditions, investor sentiment, and the company’s ability to effectively communicate its value proposition to potential investors.

The selection of these investment banks is a critical step in this process. JM Financial, with its extensive experience in financial advisory services, will play a crucial role in guiding Hero FinCorp through the intricacies of the IPO.

BofA Securities, a subsidiary of Bank of America, brings a global perspective and deep market insights to the table. Jefferies, known for its expertise in equity capital markets, will contribute to structuring and executing the offering.

ICICI Securities, a part of the ICICI Group, is expected to provide valuable insights into the Indian financial markets. HSBC Securities, a subsidiary of the renowned HSBC Group, will bring its international expertise to the IPO process.

The involvement of UBS, which recently completed the acquisition of Credit Suisse, is of particular significance. This merger has created a financial powerhouse with a global reach and unparalleled expertise.

UBS’s inclusion as an advisor highlights the company’s intent to leverage international capabilities and resources to make the IPO a resounding success. SBI Capital, a subsidiary of State Bank of India, brings with it the backing of one of India’s largest and most trusted banks.

Lastly, HDFC, a leading financial institution in India, is expected to provide valuable insights into the Indian financial landscape.

The fact that UBS completed the acquisition of Credit Suisse in June 2023 is a noteworthy development. This merger created one of the world’s largest and most influential financial institutions. UBS is renowned for its expertise in wealth management, investment banking, and asset management.

The acquisition of Credit Suisse has further strengthened UBS’s position in the global financial industry. Its inclusion as an advisor for Hero FinCorp’s IPO is a testament to the company’s commitment to leveraging the expertise and resources of a global financial giant.

Two additional sources have independently confirmed the selection of these investment banks, reinforcing the credibility and significance of this decision. This consortium of advisors is expected to bring a wealth of experience, expertise, and market insights to the table, which will be crucial in navigating the complexities of the IPO process.

The proposed structure of the IPO, which includes a combination of primary and secondary shares, offers a unique opportunity for both Hero FinCorp and its investors. By issuing primary shares, the company can raise fresh capital, which can be channeled into various growth initiatives.

This capital can be instrumental in funding expansion plans, exploring new business avenues, and investing in research and development. Simultaneously, the inclusion of secondary shares allows existing investors to exit their positions and realize the value of their investments.

This dual approach strikes a balance between the company’s need for capital and the interests of its current stakeholders.

The targeted size of the IPO, set at Rs 4,000 crore, is substantial and underscores the company’s ambitious growth plans.

However, it’s important to note that the final size of the IPO may vary depending on a range of factors, including market conditions, investor appetite, and the company’s evolving strategy. Hero FinCorp’s ability to adapt and make informed decisions in response to changing market dynamics will be a key determinant of the IPO’s success.

At this juncture, it remains uncertain whether additional investment banks will be added to the consortium. The selection of these eight banks is a significant move, but the complexity and scale of the IPO may require the involvement of more advisors. Such decisions will likely be made based on the evolving needs of the company and the dynamics of the IPO process.

Hero FinCorp’s decision to go public is also a reflection of its evolution and growth over the years. Founded in 1991, the company has steadily built its presence in the Indian financial services sector.

Its commitment to providing financing solutions to both retail and corporate customers has been a driving force behind its success. The services it offers, which include two-wheeler financing, term loans, working capital loans, bill discounting, and leasing, cater to a wide spectrum of financial needs.

In terms of ownership, Hero MotoCorp, the parent company, holds a substantial 40% stake in Hero FinCorp. This close affiliation with one of India’s leading automotive manufacturers has provided a solid foundation for the company’s growth.

The Munjal family, closely associated with the Hero Group, holds a significant share, estimated to be between 35% and 39%. The remaining stake is distributed among various investors, including dealers and financial institutions such as Apollo Global, ChrysCapital, Credit Suisse, and Heermoto Corp.

It’s worth noting that Hero FinCorp had previously secured significant funding in February 2022. This funding round raised a total of Rs 2,000 crore and included investments from Apollo Management and Hero MotoCorp.

Apollo Global Management played a significant role in this funding, contributing Rs 937 crore through its hybrid value fund.

Hero MotoCorp, the parent company, also showed its commitment to the financial subsidiary by investing Rs 700 crore. This infusion of capital was a testament to the confidence of these investors in Hero FinCorp’s growth prospects.

The financial performance of Hero FinCorp is another aspect that has undergone a significant transformation. In the fiscal year 2023, the company reported a net profit of Rs 457.33 crore, marking a remarkable turnaround from the Rs 195 crore loss it incurred in the previous fiscal year, 2022.

This impressive rebound in profitability reflects the company’s ability to adapt to changing market conditions and implement effective strategies to drive growth.

Additionally, the company’s total income from operations in the last financial year reached Rs 6,003.77 crore, representing a substantial increase of 35% compared to the previous year when it stood at Rs 4,440.58 crore.

This growth in income is indicative of the company’s expanding customer base, its ability to provide a diverse range of financial solutions, and its commitment to innovation and customer service.

The decision to go public through an IPO is a strategic move that aligns with the company’s growth trajectory and future ambitions.

It provides Hero FinCorp with a platform to access public capital markets, allowing it to tap into a vast pool of resources that can fuel its expansion plans. It’s not only an opportunity to raise capital but also a means to gain greater visibility, enhance brand recognition, and create more robust corporate governance structures.

In the context of Hero FinCorp’s growth, the IPO is a natural progression that signifies the company’s maturity and readiness to take on the challenges and opportunities of the public market. The IPO will be a significant step in its journey toward becoming a major player in the Indian financial services sector.

The involvement of prominent investment banks, such as JM Financial, BofA Securities, Jefferies, ICICI Securities, HSBC Securities, UBS, SBI Capital, and HDFC, brings a wealth of experience and expertise to the table. Each of these institutions is renowned in the financial industry for its knowledge and capabilities in various domains of financial services.

JM Financial, as one of the key advisors, will provide valuable insights into the Indian financial market. The company’s extensive experience in financial advisory services positions it as a crucial partner in guiding Hero FinCorp through the complexities of the IPO process.

BofA Securities, a subsidiary of Bank of America, contributes a global perspective and in-depth market knowledge to the consortium. The international reach and resources of Bank of America make BofA Securities an essential partner in this endeavor.

Jefferies, known for its expertise in equity capital markets, is expected to play a vital role in structuring and executing the IPO offering. The company’s experience in managing equity offerings will be a valuable asset in ensuring a successful IPO.

ICICI Securities, a part of the ICICI Group, brings with it a deep understanding of the Indian financial landscape. This knowledge will be instrumental in tailoring the IPO to suit the specific requirements of the Indian market.

HSBC Securities, a subsidiary of the renowned HSBC Group, will contribute its international expertise and resources to the IPO process. HSBC is a well-respected institution with a global reach, and its involvement signifies the company’s intent to leverage international capabilities to make the IPO a resounding success.

UBS, a financial giant with global reach, recently completed the acquisition of Credit Suisse in June 2023. This merger created one of the world’s largest and most influential financial institutions.

UBS is renowned for its expertise in wealth management, investment banking, and asset management. The acquisition of Credit Suisse has further strengthened UBS’s position in the global financial industry.

Its inclusion as an advisor for Hero FinCorp’s IPO is a testament to the company’s commitment to leveraging the expertise and resources of a global financial powerhouse.

SBI Capital, a subsidiary of State Bank of India, is a trusted name in the Indian financial sector. The backing of one of India’s largest and most respected banks brings a level of credibility and stability to the IPO process.

HDFC, another well-known financial institution in India, is expected to provide valuable insights and expertise related to the Indian financial market.

The involvement of these prominent investment banks is indicative of Hero FinCorp’s intent to ensure that its IPO is a resounding success. The expertise, knowledge, and global reach of these banks will be instrumental in guiding the company through the complexities of the IPO process.

Their collective experience will help Hero FinCorp navigate the intricacies of the financial markets and investor sentiment.

The completion of the UBS acquisition of Credit Suisse is an important development that adds another layer of significance to this IPO. UBS’s acquisition of Credit Suisse, one of the world’s leading financial institutions, positions it as a formidable player in the global financial landscape. This merger brings together two giants in the financial industry, creating a powerhouse with unparalleled expertise and resources.

UBS is well-known for its extensive range of financial services, including wealth management, investment banking, asset management, and more. With a global reach that spans continents, UBS is a trusted name for individuals and institutions seeking financial solutions and expertise. The acquisition of Credit Suisse further solidifies UBS’s position in the global financial industry.

The merger also highlights UBS’s commitment to enhancing its capabilities and expanding its reach in the financial world. The acquisition of Credit Suisse’s assets and expertise is a strategic move that aligns with UBS’s goal of providing world-class financial services to its clients. This commitment to growth and innovation is a valuable asset that UBS brings to the table as an advisor for Hero FinCorp’s IPO.

The involvement of UBS in Hero FinCorp’s IPO is significant on multiple fronts. Firstly, it reflects the company’s intent to leverage the international capabilities and resources of a global financial giant. UBS’s global reach and expertise can open up new avenues and opportunities for Hero FinCorp in the international financial landscape.

Secondly, the merger with Credit Suisse positions UBS as one of the most influential players in the global financial industry. This level of influence and reach can be instrumental in shaping the success of Hero FinCorp’s IPO. It provides access to a vast network of investors, institutions, and resources that can be pivotal in ensuring a successful offering.

UBS’s involvement also signifies its commitment to providing top-tier financial advisory services. The complexities of an IPO require a high degree of expertise, and UBS, with its extensive experience in financial services, is well-equipped to guide Hero FinCorp through the intricacies of the process.

The decision to go public through an IPO is a significant step for Hero FinCorp, and the involvement of UBS underscores the company’s commitment to making this offering a success. It’s a testament to Hero FinCorp’s ambition and vision for the future.

In addition to UBS’s involvement, the selection of seven other renowned investment banks further solidifies Hero FinCorp’s IPO as a highly anticipated event in the financial world. The involvement of such reputable institutions is indicative of the company’s determination to create an IPO that stands out as a milestone in its history.

The involvement of prominent investment banks is not only a reflection of Hero FinCorp’s ambitions but also a response to the evolving landscape of the financial services sector in India. The financial industry in the country is experiencing significant growth and transformation, driven by changing consumer behavior, technological advancements, and regulatory changes. The demand for diverse financial solutions is on the rise, and financial institutions need to adapt to meet these evolving needs.

The involvement of these investment banks brings a wealth of experience and knowledge to the table. Each bank has its own areas of expertise, whether it’s equity capital markets, wealth management, investment banking, or asset management. This diverse skill set ensures that Hero FinCorp receives comprehensive guidance and support throughout the IPO process.

The involvement of SBI Capital, a subsidiary of State Bank of India, is particularly noteworthy. State Bank of India is one of the largest and most trusted banks in India, and its support adds a layer of credibility and stability to Hero FinCorp’s IPO. The backing of such a reputable institution is a strong endorsement of the company’s prospects and potential for growth.

HDFC, another prominent financial institution in India, is also expected to play a vital role. HDFC’s extensive experience in the Indian financial market positions it as a valuable advisor in shaping the IPO to align with the specific requirements of the Indian market.

The involvement of these investment banks is a testament to the significance of Hero FinCorp’s IPO in the Indian financial landscape. It signals the company’s intent to leverage the expertise and resources of these banks to ensure the success of the offering.

The proposed structure of the IPO, which includes a combination of primary and secondary shares, offers unique advantages for both Hero FinCorp and its investors. By issuing primary shares, the company can raise fresh capital, which can be directed toward various growth initiatives. This capital infusion can be instrumental in funding expansion plans, exploring new business avenues, and investing in research and development.

Simultaneously, the inclusion of secondary shares provides existing investors with an opportunity to exit their positions and realize the value of their investments. This dual approach to the IPO ensures that the company can address both its capital requirements and the interests of its current stakeholders.

The targeted size of the IPO, set at Rs 4,000 crore, is substantial and underscores Hero FinCorp’s ambitious growth plans. However, it’s important to recognize that the final size of the IPO may vary based on various factors, including market conditions, investor appetite, and the company’s evolving strategy.

The success of the IPO will depend on several key factors. Market conditions play a crucial role, as they can significantly impact investor sentiment and appetite.

A favorable market environment can create strong demand for the IPO, while a challenging market can pose obstacles. Hero FinCorp, in collaboration with its advisors, will need to closely monitor market dynamics and be prepared to adapt its strategy accordingly.

The communication of Hero FinCorp’s value proposition to potential investors will also be critical. Investors need to understand the company’s business model, growth prospects, competitive advantages, and financial performance. Clear and effective communication is essential in building trust and confidence among investors.

The ability to adapt to changing market conditions and investor sentiment is a key challenge in the IPO process. This requires agility and a proactive approach to decision-making. The involvement of seasoned investment banks, such as those selected by Hero FinCorp, brings a wealth of experience and expertise in navigating these challenges.

At this stage, it remains uncertain whether additional investment banks will be added to the consortium. The selection of these eight banks is a significant move, but the complexity and scale of the IPO may necessitate the involvement of more advisors. Such decisions will likely be made based on the evolving needs of the company and the dynamics of the IPO process.

The decision to go public through an IPO is a strategic move that aligns with Hero FinCorp’s growth trajectory and future ambitions. It’s not merely a financial transaction; it represents a transformative step in the company’s journey. This decision reflects the company’s maturity and readiness to embrace the challenges and opportunities that come with being a publicly traded entity.

The involvement of renowned investment banks, including UBS, adds a layer of significance to this IPO. It signifies Hero FinCorp’s intent to leverage the expertise and resources of global financial giants to make this offering a resounding success. It’s a testament to the company’s ambition and vision for the future.

Hero FinCorp’s evolution and growth since its establishment in 1991 have been remarkable. The company’s focus on providing diverse financial solutions to a wide range of customers, from retail clients to corporations, has been a key driver of its success. Its offerings, which include two-wheeler financing, term loans, working capital loans, bill discounting, and leasing, cater to a broad spectrum of financial needs.

The ownership structure of Hero FinCorp reflects the company’s affiliation with Hero MotoCorp, one of India’s leading automotive manufacturers. Hero MotoCorp holds a substantial 40% stake in Hero FinCorp, providing a strong foundation for the company’s growth.

The Munjal family, closely associated with the Hero Group, holds a significant share, estimated to be between 35% and 39%. The remaining stake is held by various investors, including dealers and financial institutions such as Apollo Global, ChrysCapital, Credit Suisse, and Heermoto Corp.

In February 2022, Hero FinCorp secured significant funding, raising a total of Rs 2,000 crore. This funding round included investments from Apollo Management and Hero MotoCorp.

Apollo Global Management played a significant role in this funding, contributing Rs 937 crore through its hybrid value fund. Hero MotoCorp, the parent company, also showed its commitment to the financial subsidiary by investing Rs 700 crore. This infusion of capital was a strong vote of confidence in Hero FinCorp’s growth prospects.

The financial performance of Hero FinCorp has undergone a significant transformation. In the fiscal year 2023, the company reported a net profit of Rs 457.33 crore, marking a remarkable turnaround from the Rs 195 crore loss it incurred in the previous fiscal year, 2022. This impressive rebound in profitability reflects the company’s ability to adapt to changing market conditions and implement effective strategies to drive growth.

Additionally, the company’s total income from operations in the last financial year reached Rs 6,003.77 crore, representing a substantial increase of 35% compared to the previous year when it stood at Rs 4,440.58 crore.

This growth in income is indicative of the company’s expanding customer base, its ability to provide a diverse range of financial solutions, and its commitment to innovation and customer service.

The decision to go public through an IPO is a testament to Hero FinCorp’s evolution and the potential it sees in the future. It’s a recognition of the company’s ability to adapt, grow, and thrive in the ever-changing financial landscape.

In conclusion, Hero FinCorp’s decision to go public and the selection of eight renowned investment banks mark a significant turning point in the company’s history. This IPO, scheduled for 2024, holds the promise of reshaping the financial services sector in India and providing an opportunity for investors to participate in the growth and success of a prominent financial institution.

The involvement of investment banks, including UBS, reflects the company’s commitment to making this IPO a resounding success. These banks bring a wealth of experience, expertise, and global reach to the table, which will be instrumental in navigating the complexities of the IPO process.

The proposed structure of the IPO, which includes primary and secondary shares, offers a unique opportunity for both the company and its investors. It provides a means to raise capital for growth initiatives while also allowing existing investors to realize the value of their investments.

The success of the IPO will depend on factors such as market conditions, investor sentiment, and the company’s ability to effectively communicate its value proposition. The ability to adapt to changing market dynamics will be a key determinant of the IPO’s success.

Hero FinCorp’s decision to go public is a strategic move that aligns with its growth trajectory and future ambitions. It reflects the company’s readiness to take on the challenges and opportunities of the public market. The involvement of prominent investment banks, including UBS, adds a layer of significance to this IPO, underscoring its importance in the financial world.

Hero FinCorp’s journey from its establishment in 1991 to its current position as a leading non-banking financial company is a testament to its adaptability, innovation, and commitment to customer service. The company’s financial performance and ownership structure reflect its stability and growth potential.

In the context of the rapidly evolving financial services sector in India, Hero FinCorp’s decision to go public through an IPO is not only a reflection of its ambitions but also a response to the changing dynamics of the industry. The demand for diverse financial solutions, combined with technological advancements, regulatory changes, and shifting consumer behavior, necessitates a strategic move like this.

The confidentiality surrounding these developments is a common practice in the financial world, where the stakes are high, and information can have a profound impact on market dynamics.

Hero FinCorp’s journey from its establishment in 1991 to its decision to go public in 2024 is a testament to its evolution and growth. The involvement of renowned investment banks, including UBS, positions this IPO as a highly anticipated event that will shape the company’s future and contribute to the evolution of the Indian financial services sector.