Apollo leads $267 mn in non-bank lender Hero FinCorp
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Hero FinCorp has raised Rs 2,000 crore ($267 million) growth capital from US-based private equity major Apollo Management, its parent Hero MotoCorp and other investors, the non-banking financial company (NBFC) said in a statement.

Apollo Global Management, through its Hybrid Value Fund, has committed Rs 937 crore ($125 million), while Hero MotoCorp has put in Rs 700 crore ($94 million), with other investors putting in the rest of the money, the company said.

“This fresh capital infusion will fuel our growth to $10 billion in assets, and enable us to serve over 15 million customers by FY25. This is in keeping with our mission of empowering every Indian’s dream of upward mobility,” said Abhimanyu Munjal, joint managing director and CEO, Hero FinCorp. 

Apollo is likely to pick up minority stake of around 9-11% in the NBFC, which got deemed approval last week by monopoly watchdog Competition Commission of India (CCI). 

As of September 30, 2021, Apollo had approximately $481 billion of assets under management (AUM).

This is likely to be Apollo’s third investment in India after its breakup with ICICI Venture in 2020. In 2021, they invested around $200 million (~Rs 1,500 crore) into JSW Cement. It invested $500 million into Piramal Finance’s AIF in 2020, according to a previous Economic Times report. Apollo’s India team is led by Utsav Baijal, who oversees their 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 which we believe has significant tailwinds in India,” Matt Michelini, Partner, Head of Asia Pacific & co-Head of Hybrid Value at Apollo. 

Hero MotoCorp, the largest two-wheeler maker in India, owns 40% of Hero Fincorp and its promoters the Munjal family hold around 30-35% in the firm. Other shareholders include ChrysCapital, Credit Suisse and Apis Partners besides some dealers of Hero MotoCorp. 

The fundraise was approved by the boards of Hero MotoCorp and Hero FinCorp in January 2022. 

The latest fundraise will support Hero FinCorp’s growth strategy as the company continues to further expand its product offerings across India’s retail, SME, and corporate lending landscape. 

The investment is subject to satisfaction of closing conditions, including certain regulatory approvals, and is expected to close by April 2022.  JM Financial advised Hero Fincorp on this transaction. Shardul Amarchand Mangaldas & Co and J Sagar Associates were the legal advisors on the transaction. 

With this fresh capital infusion, the net worth of the company – which is rated AA+ by Icra and Crisil – will be Rs 6,782 crore ($900 million) on a consolidated basis, the company said. 

Founded in 1991 as Hero FinLease Ltd, it further expanded in 2012, and has since grown its loan book from Rs 300 crore to approximately Rs 30,000 crore over the past 10 years. 

Overall, the company serves over seven million customers through its 4,000 plus touchpoints, spread across more than 2,000 locations. 

Hero FinCorp also has a dedicated home finance arm called Hero Housing Finance which is a 100% subsidiary with an asset book of over Rs 2,500 crore.

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