Hero FinCorp (HFCL), a consumer banking company, plans to raise Rs 2,000 crore from current and previous investors for business reasons. This capital raise round will see Hero MotoCorp (HMCL) invest Rs 700 crore. The investment will be made in HFCL’s CCPS (compulsorily convertible preference shares).
According to Hero’s exchange statement, HMCL owned 41.2 percent of HFCL before the investment. “The exact shareholding of HMCL in HFCL following the investment will be established upon the completion of HFCL’s capital raise round,” according to the filing. It further stated that this investment is contingent on the signing of definitive papers and the fulfillment of certain transaction-related criteria.
The Munjal family is also the promoter of Hero FinCorp, in addition to owning over 40% of the company. Renu Munjal is the Managing Director of Hero FinCorp and is also involved in charitable efforts across the Group, while Pawan Munjal is the Chairman and Director of Hero FinCorp. According to the Hero FinCorp website, Abhimanyu Munjal is the Joint Managing Director and CEO and has led multinational JVs, M&As, and complicated transformations.
Hero FinCorp has been in operation since 1991 when it was founded as Hero Honda FinLease Limited. HFCL is a non-bank financial company that offers a variety of products to both retail and business customers, including two-wheeler finance, term loans, working capital loans, loan against property, bill discounting, leasing, and more.
Hero FinCorp had a turnover of Rs 4,091.64 crore in the quarter ended March 2021. In 2019-20 and 2018-19, the consumer banking organization generated revenues of Rs 3,702.62 crore and Rs 2,492.52 crore, respectively.