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Six PE Funds to invest Rs 4250cr in Hero Investments

A clutch of six PE players will invest upto Rs 4,250 crore in Hero Investments. CNBC-TV18 learns that Hero Investments and Bahadur Chand Investments, both owned by the Munjals, will then acquire Hondas 26% stake in Hero Honda. As a result of this PE players will hold an indirect stake of 15.4% in Hero Honda. CNBC-TV18 Kritika Saxena reports.

The company had got the official FIPB approval for upto Rs 4,500 crore of foreign investment. The PE players include the like of Bain Capital, Carlyle Group, KKR, Government of Singapore, Warburg Pincus and TPG.

Bain Capital will be investing through BC India Private Investors, while Carlyle will be investing through Carlyle Mauritius and TPG will be investing through an SPV route whereas Warburg Pincus will be investing through Redwood Investments.

Meanwhile, KKR will be investing through Zen Mauritius VI, which is its wholly-owned subsidiary. The Government of Singapore will be investing through its wholly-owned investment arm Indivest.

Hero Investments will issue fresh equity as well as sell existing shares to the clutch of PE players. Sources say after this Hero Investments, together with Bahadur Chand Investments, will be taking in 26% that the Munjals took from Honda Motors.

Around 45% will the amount that PE players will be taking in Hero Investments.

Hero Investments will issue fresh equity as well as sell existing shares to the clutch of PE players. Sources say after this Hero Investments, together with Chand Investments, will be taking in 26% that the Munjals took from Honda Motors.      

Hero Investments holds around 17% in Hero Honda. The company also has investment in couple of other portfolio companies as well. Sources say after the deal completed, Hero Investments will seize to own investments in any kind of other portfolio companies and will be entirely Hero Honda.

CNBC-TV18’s Swati Khandelwal reports on some exclusive details of Hero Group's fund raising plans.

Before Hero pumps in the private equity money, it will have to close the deal with Honda. The company will be looking at raising about USD 749 million via issue of bonds. This will be a short term loan or debt that they will pick up. They will pick up Rs 2,900 crore via three month bond and the remaining Rs 500 crore will be picked up via the 12 month bond.

The coupon rate will be decided and finalised in the next couple of days. The company is looking at raising funds in the next week or so, which has to be done before March 31. It’s a short term method that the company is taking in order to fund this deal and then the money will be pumped in from the private equities. Hence, they will get rid of these bonds. It’s likely that some of the new domestic mutual funds will be participating in these bonds.

Source: Money Control

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