The buy-out is valued at Rs.3,841 crore
The BML Munjal-led Hero Group on Tuesday said it would acquire the entire 26 per cent stake of Japan's Honda Motor Co in their joint-venture Hero Honda Motors Ltd (HHML) for over Rs.3,841 crore.
The company also said it would raise funds from private equity firms, including Bain Capital and Lathe Investment, estimated to be around Rs.4,500 crore to finance its buy-out by selling stake in Hero Investments Private Limited (HIPL).
“Hero Investments Private Limited (HIPL), an investment company of the Hero Group, said in a statement that it was acquiring all of Honda's 26 per cent stake in HHML at Rs.739.97 per share.”
Signs pacts with PE firms
The Hero Group has also signed definitive agreements with PE firms BC India Private Investors II, an affiliate of Bain Capital LLC, and Lathe Investment Private Limited, a wholly-owned subsidiary of Government of Singapore Investment Corporation (Ventures) Pvt. Ltd.
Hero Investments will sell stakes to the PE firms to raise funds for acquiring Honda's stake in Hero Honda, it added. It is one of the main shareholders of the country's largest two-wheeler maker Hero Honda.
“Further details will be shared after receiving the necessary approval from the CCEA.
The funds received as investment made in the holding company by the PE firms will be used to retire a significant portion of the debt that has been raised by HIPL recently for financing the acquisition,” it added.
In December last year, the Hero Group and Honda Motor Co had agreed to part ways from their joint venture after 26 years.