BMW and Ducati supplier Hero Motors will launch its Rs 1,000 crore IPO on September 16, with proceeds going towards debt reduction and capacity expansion
Indian auto parts maker Hero Motors has set a price band of Rs 79 to Rs 84 per share for its initial public offering, valuing the company at about Rs 3,815 crore at the upper end of the range.
The three-day IPO will open for subscription on September 16 and close on September 18, according to a public filing released early Thursday. Anchor investors will be able to place their bids on September 15.
The issue is expected to raise about $105 million, or roughly Rs 1,000 crore. It comprises a fresh issue of shares worth up to Rs 600 crore and an offer for sale of shares worth up to Rs 400 crore by existing shareholders.
Hero Motors plans to use proceeds from the fresh issue to reduce its debt and purchase equipment for expanding its manufacturing facility in Uttar Pradesh.
The IPO comes as Indian auto component manufacturers look to expand production and strengthen their role in global vehicle supply chains. Hero Motors supplies components to global automakers, including BMW and Ducati.
The company is led by Pankaj Munjal, whose family also controls Hero MotoCorp, India largest two-wheeler maker by sales volumes. Hero Motors and Hero MotoCorp are separate companies, although they share the Munjal family connection.
Hero Motors business includes manufacturing and supplying components for the automotive industry, with customers in India and overseas. Its presence among global vehicle manufacturers gives the company exposure to demand from the wider auto industry as automakers increase sourcing from component suppliers.
The proposed expansion in Uttar Pradesh is expected to add manufacturing equipment and capacity. The company has said part of the IPO proceeds will be directed towards this expansion, while debt reduction is another key use of the fresh capital.
The offer for sale component will allow existing shareholders to sell part of their holdings, with proceeds from that portion going to the selling shareholders rather than the company.
ICICI Securities, JM Financial and DAM Capital are the book-running lead managers for the IPO.