Private equity firm Bain Capital Partners has sold 4.28 per cent or around three-fourths of its remaining holding in Hero MotoCorp Ltd via secondary market share sale on Friday for approximately Rs 2,456 crore ($400 million).
The deal allows the PE firm to encash as much as 50 per cent more than its original investment, translating into over 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 over Rs 400 crore in dividend earnings alone from its holding in Hero MotoCorp.
With this it has sold around 83 per cent of its original stake holding. In June this year Bain Capital had sold 2.8 per cent or around a third of its holding in Hero MotoCorp for approximately Rs 1,480 crore ($248 million).
This takes its total exit value to over $700 million (including dividends), the biggest in the last two years and one of the largest ever. In 2012 Carlyle exited from HDFC pocketing $840 million. In the same year General Atlantic and Oak Hill Capital Partners had sold their stake in Genpact to Bain and GIC in a $1 billion deal.
Bain Capital held 5.77 per cent as of September 30, 2014 and post the latest transaction it holds 1.5 per cent, which is worth Rs 870 crore.
Hero MotoCorp’s shares last changed hands at Rs 2,898.5 each, down 2 per cent on BSE in a weak Mumbai market on Friday.
Bain Capital 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 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)