Hero Fin Corp Files DRHP

Document Summary

Hero FinCorp Limited Draft Red Herring Prospectus Summary:

Core Business: A non-banking financial company (NBFC) providing diversified financial products. Target segments are growing retail and formalizing micro, small, and medium enterprises (MSMEs) in India.

Offer Details:

• Total Offer Size: Up to ₹36,681.34 million.
• Fresh Issue: Up to ₹21,000.00 million (Equity Shares).
• Offer for Sale: Up to ₹15,681.34 million (Equity Shares by Selling Shareholders).
• Employee Reservation: A portion reserved for eligible employees.
• Shareholder Reservation: A portion reserved for eligible HMCL Shareholders.
• Net Offer: The offer less the Employee and Shareholder Reservation portions.
• Pre-IPO Placement: Possibility of pre-IPO placement of equity shares for up to 4,200 million.

Eligibility & Regulations:

• Offer made under SEBI ICDR Regulations.
• Minimum 75% of Net Offer to be allocated to Qualified Institutional Buyers (QIBs).
• Specific reservations exist within QIB portion for Anchor Investors and Mutual Funds.
• Up to 15% of Net Offer allocated to Non-Institutional Bidders (with sub-categories based on application size).
• Up to 10% of Net Offer allocated to Retail Individual Bidders (RIBs).
• Risks exist related to first-time equity offering and no formal market for Equity Shares.

Objects of the Offer (Net Proceeds Use): Augmenting the Company's Tier-I capital base to meet future capital needs for onward lending. Potential Pre-IPO Placement may decrease the size of Fresh Issue.

Company Information

• Incorporation: Originally "Hero Honda Finlease Limited" (1991), renamed "Hero FinCorp Limited" (2011).
• Registered Office: 34, Community Centre, Basant Lok, Vasant Vihar, New Delhi.
• Promoters: Hero Motocorp Limited, Bahadur Chand Investments Private Limited, Hero Investcorp Private Limited, Brijmohan Lal Om Parkash (Partnership Firm), Dr. Pawan Munjal, Renu Munjal, Suman Kant Munjal, Renuka Munjal and Abhimanyu Munjal.

Key Risks:

• Reliance on Hero MotoCorp Limited for sourcing two-wheeler loans.
• Non-performing assets and provisioning requirements.
• Dependence on new-to-credit borrowers.
• Concentration of assets under management in retail and MSME finance.
• Regulatory proceedings against Promoters.
• Information technology system disruptions.
• Changes in interest rates.
• Unsecured loans.
• Regulatory and periodic inspections.

Key Strengths:

• Established NBFC with Hero heritage.
• Extensive customer franchise through pan-India distribution.
• Customer-centric approach.
• Integrated technology platform.
• Prudent risk management practices.

Financial Highlights (Restated Consolidated Financial Information):

• Equity Share Capital: ₹1,273.06 million (as of March 31, 2024).
• Net Worth: ₹57,659.70 million (as of March 31, 2024).
• Total Income: ₹83,597.31 million (for the year ended March 31, 2024).
• Restated Profit after Tax: ₹6,370.48 million (for the year ended March 31, 2024).
• Total Borrowings: ₹461,694.76 million (as of March 31, 2024).

Additional Details:

• Provisions for employees, outstanding litigation and material developments, government and other approvals, etc.

Management and Legal:

• Lists of book running lead managers, company secretary, and legal counsel.
• Includes information on registrar to the offer and the company's auditors.
• Lists and details legal and other information

Listing Information:

• Equity Shares will be listed on BSE and NSE.
• Is the designated stock exchange.