Auto parts maker Hero Motors Ltd has raised nearly ₹300 crore from anchor investors ahead of its ₹1,000-crore initial public offering (IPO), which will open for subscription on Wednesday, September 16. The company allotted 3.57 crore equity shares to anchor investors at ₹84 apiece, the upper end of its IPO price band, according to a circular uploaded on the BSE website.
The anchor book attracted a mix of domestic and overseas institutional investors. Participants included ICICI Prudential Life Insurance Company, 3P India Equity Fund 1M, Edelweiss Life Insurance Company, Societe Generale and ASAS Global Fund Incorporated VCC Sub Fund. Shares were also allocated to domestic mutual funds, including ICICI Prudential Mutual Fund, Kotak Mahindra Mutual Fund, JM Financial Mutual Fund and Bank of India Mutual Fund.
IPO closes September 18
Hero Motors has set a price band of ₹79-84 per equity share for the public issue, which will remain open for subscription until September 18. At the upper end of the price band, the company is seeking to raise ₹1,000 crore through a combination of fresh shares and an offer for sale by existing promoters.
The IPO comprises a fresh issue worth up to ₹600 crore and an offer for sale of shares aggregating up to ₹400 crore. Under the OFS component, promoter O P Munjal Holdings will sell shares worth ₹395 crore, while Hero Cycles Ltd will divest shares valued at ₹5 crore. Since proceeds from an OFS go to the selling shareholders, Hero Motors will receive funds only from the fresh issue portion.
Debt repayment, expansion
Of the money raised through the fresh issue, Hero Motors plans to deploy ₹190 crore towards repayment or prepayment of certain outstanding borrowings. Another ₹200 crore has been earmarked for purchasing equipment required to expand capacity at the company's facility in Gautam Buddha Nagar, Uttar Pradesh.
The balance will be used to pursue inorganic growth through acquisitions and other strategic initiatives that have not yet been identified, apart from general corporate purposes. The proposed deployment indicates that Hero Motors intends to use the IPO both to strengthen its balance sheet and support future manufacturing and business expansion.
Global OEM customer base
Hero Motors operates as an automotive technology company specialising in the design, development, manufacture and supply of engineered powertrain solutions. Its products cater to automotive original equipment manufacturers across major international markets, including the US, Europe, India and the Association of Southeast Asian Nations region.
Its global customer base includes BMW AG, Ducati Motor Holding S.P.A., Enviolo International Inc, Formula Motorsport Ltd and Hummingbird EV. The international exposure gives the company access to several automotive markets while also making its performance sensitive to global demand and developments across the mobility industry.
Following the three-day subscription period, Hero Motors shares are expected to make their stock market debut on September 23. The nearly ₹300-crore anchor allocation ahead of the issue provides an early indication of institutional participation as the company prepares to test broader investor appetite when its IPO opens on Wednesday.