PEs to buy 30% in HIPL for Rs 3,900 cr,to get 13% in 2-Wheeler Firm

Private equity firm Bain Capital and an investment arm of the Government of Singapore will buy a 30% stake in Hero Investment Private or HIPL,which owns 17% of Hero Honda Motors,for Rs 3,900 crore edging out other investors seeking a slice of the worlds second-largest twowheeler market.The transaction,once concluded,will give Bain Capital and the investment arm,GIC Singapore,an indirect holding of close to 13% in Indias largest two-wheeler company.

Munjals,the family that set up Hero Honda in a joint venture with Japanese auto major Honda Motor company 27 years ago,will buy out the foreign partners 26% stake at half the current market price.The Hero Group will have to pay about Rs 3,900 crore or around Rs 750 per share against the current price of Rs 1,490 per share.This will be funded by the investment from Bain and GIC.HIPL will buy Hondas 26%,raising its stake to just over 43%.The 30% stake in HIPL to be held by GIC and Bain will translate into an indirect equity stake of 12-13 % in Hero Honda.GIC and Bain were the highest bidders among six PE firms vying for a stake in HIPL,the investment arm of the Delhi and Ludhiana-based Munjals.Munjals have finalised the PE firms Bain Capital and GIC Singapore and are awaiting government approval to conclude the deal, said an official from a PE firm who participated in the bidding process.

The Indian promoters had invited bids from six PE firms Bain Capital,Carlyle,GIC Singapore,Kohlberg Kravis Roberts (KKR),TPG and Warburg Pincus.While Bain Capital and GIC Singapore agreed to buy at the current market price of around Rs 1,450 per share of Hero Honda,the other four bidders quoted the price between Rs 1,250-1,300, another official from a PE firm said.