Bain Capital raised $400 million in an accelerated block in Indian motorcycle manufacturer Hero MotoCorp on Friday, twice the amount of the original base deal.
The private equity firm initially sought to raise $200 million by selling 4.3 million shares at a price range of Rs2,859.58 to Rs2.963.30 per unit. The shares priced towards the bottom end of the initial range at Rs2,874, a 3% discount to the November 5 close of Rs2,963 per share.
Strong demand allowed Bain to exercise the upsize option and increase the number of shares on offer to 8.54 million, netting the private equity firm $400 million from the share sale.
Bain, which has been an investor in the company since 2011, previously owned a 5.6% stake in the company, or 11.5 million shares, and now owns 1.6%, or roughly 2.9 million shares, in the group.
Only 40 lines participated in the deal, roughly 70% long-only institutional investors and 30% hedge funds. Typically, when a deal is upsized by such a significant amount, there are more investors in the book. But interest among long-only investors encouraged the issuer to exercise the upsize option, sources said.
“There were some very large long-only accounts who took up a big portion. That’s why they decided to upsize,” sources close to the deal tell FinanceAsia. The source described the deal as well covered, although declined to say by how many times.
Shares in Hero MotoCorp fell 1% on Friday following the share sale. It is trading at 21.88 times its 2015 earnings.
It is Bain’s second share sale in Hero MotoCorp this year, with the private equity firm offloading a 2.5% stake in the Indian company in June and selling shares at Rs1,481 per unit. It raised $250 million from the share sale in June, down from the $300 million it initially aimed to raise.
Bain invested $550 million in Hero Investment along with the Government of Singapore Investment Corp (GIC) in 2011. Bain and GIC’s contributions helped the Munjal family-controlled company fund its purchase of Honda Motor's 26% stake in Hero Honda Motors, a joint venture between Hero and Japan’s Honda. It has since been renamed Hero MotoCorp.
Deutsche Bank acted as the sole lead on Friday’s share sale.
