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Bain Capital scores 2x with part exit worth $248M from Hero MotoCorp

13 June, 2014

Private equity firm Bain Capital Partners has sold 2.8 per cent or around a third of its holding in Hero MotoCorp Ltd via book-building market transaction on Friday for approximately Rs 1,480 crore ($248 million).

According to the term sheet, Bain was looking to sell almost half of its holding worth up to $393 million (Rs 2,328.5 crore) on Friday. It had offered an indicative price band of Rs 2,582 to Rs 2,717 per share to offload its shares.

However, the fund has sold less than the overall shares earmarked for sale at a price of Rs 2,636 per share.

Citi was one of the joint book runners of the transaction.

Post this transaction, it holds 5.8 per cent stake in Hero MotoCorp.

The company’s shares last changed hands at Rs 2,588.85, down 4.4 per cent on BSE in a weak Mumbai market on Friday. Its remaining holding is now worth Rs 2,977 crore.

The deal allows the PE firm to encash part of its original investment, translating into a 2x return, including dividend earnings in its little over three-year-old investment, as per VCCircle estimates. The PE firm is estimated to have generated around Rs 360 crore in dividend earnings from its holding in Hero MotoCorp in the last three years alone.

The automaker has just declared dividend of Rs 65 a share, which would bring it around Rs 73 crore from its remaining holding.

The PE firm had co-invested with Singapore’s sovereign wealth fund GIC three years ago to bankroll the Munjal family for buying out Honda Motor from their more-than-two-decade-old joint venture. The Munjals acquired the 26 per cent stake held by Honda Motor through their private holding arm Hero Investments Pvt Ltd (HIPL), financed through a loan, and then sold a minority stake in HIPL to Bain Capital and GIC to retire the debt.

Last year HIPL was merged with the listed company giving direct equity stake to the two investors and allowing them a free hand to exit the company as any public shareholder.

Although the exact quantum invested by the two financial investors was never made public it was believed to be anywhere between Rs 3,650 crore and Rs 4,500 crore. Bain had brought in around 70 per cent of this while GIC pitched in with the remaining amount. This means Bain invested between Rs 2,555 crore and Rs 3,150 crore to buy the stake.

(Edited by Joby Puthuparampil Johnson)


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Bain Capital scores 2x with part exit worth $248M from Hero MotoCorp

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