Bain, GIC assist in Hero Honda buyout
Months after negotiations began between Japan’s Honda Group and India’s Hero Group to enact a strategy for Honda to exit the Hero Honda JV, Hero Group has officially bought out Honda’s 26% stake in the company, with private equity players Bain Capital and the Government of Singapore Investment Corp. (GIC) committing an undisclosed amount to facilitate the deal.
The 26% stake reportedly sold for approximately $851 million, or INR739.97 ($16.16) per share - a nearly 50% discount to Hero Honda's Tuesday trading price of INR1,518.15 ($33.16) per share. According to Hero Group, the $4 billion-company teamed with private equity firms Bain Capital, via its BC India Private Investors II, and the GIC-owned Lathe Investment Private Limited for capital backing. That undisclosed financing will largely be used to cut down Hero Honda's debts, reports note. Honda's 26% share of the JV, which has emerged as India's top motorcycle company, was previously estimated to be worth $1.9 billion.
News surfaced in August that Honda looked to divest a portion of its stake in the company, however negotiations reportedly stalled after Honda and Hero Honda's remaining promoters conflicted over the valuation of the stake. Private equity players including KKR, TPG Capital, the Blackstone Group, Carlyle, Clayton Dubilier Rice and Temasek Holdings were also reportedly involved in investment conversations, but Bain and GIC emerged as the deal's victors by December.
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