Bain makes partial exit from India’s Hero MotoCorp

The private equity firm sold 5.6 million shares in Hero at around INR2,636 apiece. On the same day, Goldman Sachs bought 1.04 million shares in the company for INR2.75 billion.

Bain owned 8.58% of Hero as of the end of March. Local media earlier said that the PE firm was putting 8.57 million shares up for sale, or 4.29% of Hero's total share capital. Shares in the company have risen 30% so far this year, following an 8.6% gain in 2013. They closed down 4.8% at INR2,588 on the Bombay Stock Exchange on June 13, following news of the partial exit.

Based on current market values, Bain's remaining holding is worth nearly INR30 billion.

Hero Honda was created in 1984 as a joint venture between India's Hero Group, controlled by the Munjal family, and Honda Motor of Japan. Hero Group wanted to buyout its partner but was supposedly wary of executing the transaction through leverage and the capital markets for fear of a sell down. Private equity involvement was a logical alternative.

Bain came in and the Munjal family gained financial backing for its portion of the transaction from GIC Private. In March 2011, they paid $851 million for Honda's 26% interest in the joint venture in what was by far India's largest buyout of the year. Bain took the majority of the equity. The deal was priced at a near 50% reduction on the most recent trading price.

The following year, Hero MotoCorp approved a proposal to merge the investment arm of its parent company - Hero Investments - into the automaker. As a result, Bain and GIC, who were originally shareholders of Hero Investments, took direct stakes of 8.58% and 3.71% in the company.

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• Topics
• South Asia
• Exits
• Industrials
• India
• Exit
• Sell down
• Bain Capital Asia
• automobiles