US-based private equity major Apollo Management has agreed to invest around Rs 940 crore ($125 million) as growth capital to pick up minority stake into Hero Fincorp, the lending unit of the Hero Group.
The investment will be made through Apollo’s investment affiliate AHVF II Holdings Singapore II Pte. Ltd, according to a public disclosure viewed by VCCircle.
Apollo will acquire around 9-11% stake in the non-banking financial company (NBFC) on a fully diluted basis along with a board seat, as per an Economic Times report.
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. As per reports, it has in 2020 invested $500 million into Piramal Finance’s AIF. Apollo’s India team is led by Utsav Baijal, who oversees their private equity and credit businesses.
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.
Last month, Hero MotoCorp said its board has approved investing up to Rs 700 crore in the NBFC arm.
The fundraising will be part of a larger Rs 2,000 crore capital raising exercise from existing and new investors.
Apollo’s investment values the lender at around Rs 12,000 crore ($1.6 billion), post money, the Economic Times report said.
Prior to this, Hero Fincorp had raised equity funding in the financial year 2019-20 when existing investors invested over Rs 1,074 crore valuing the company at around $1.3 billion.
Currently, Hero Fincorp (erstwhile Hero Finlease) has loan book of around Rs 28,000 crore which is between the retail (50%) and SME (30%) corporate loan (20%) segments. It also owns a housing finance arm as a 100% subsidiary, with revenues over Rs 2400 crore.