Carlye, KKR, Warburg Pincus ready as India's Hero Honda deal restarts
US PE majors the Carlyle Group, Kohlberg Kravis & Roberts (KKR) and Warburg Pincus are in line to take a 15-18% stake apiece in India's Hero Honda Motors, coming as Japanese auto maker Honda nears its exit from the JV.
Touted as India's largest motorcycle company, Hero Honda is a JV launched in 1984 between India's Hero Group and Japan's Honda Motor Company.
Two months after reports first surfaced that Honda was looking to exit a portion of its 26.21% stake, and a month after other reports that the divestment process was stalled, Hero Group is now set to acquire Honda's full stake in the JV via an SPV. The PE players would then buy shares in the SPV, giving them up to 18% of the company and Hero Group an approximate 36% stake, leaving it the company's largest backer. Honda, meanwhile, would exit Hero Honda to focus on Honda Motorcycles and Scooters India.
Other investors previously cited as interested in the asset include TPG Capital, the Blackstone Group, Clayton Dubilier Rice, and Temasek Holdings. Hero Honda's stake was estimated to be worth INR9,000 crore ($1.94 billion) as of September trading prices, yet PE firms were reportedly reluctant to make parallel bids because the company is poised to trade much lower following Honda's exit.
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