Bain nets $400m through part-exit from India’s Hero MotorCorp

The private equity firm sold approximately 8.5 million shares at INR2,874 apiece, a 3% discount to the November 5 closing price, according to a regulatory filing. The initial plan was to raise $200 million but the deal upsized in response to strong investor demand. It is one of the largest block trades on India's public markets this year.

Bain' stake in Hero MotorCorp has now fallen from 5.77% to 1.49%. In June, the firm cut its holding from 8.58%, selling 5.6 million shares for INR14.8 billion. Its remaining interest in the company is worth INR8.6 billion at current market prices.

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
• Exits
• South Asia
• Industrials
• India
• Bain Capital Asia
• Exit
• Sell down
• manufacturing
• Transportation