Bain, GIC ride off with $852m Indian motorcycle deal

The duo will gain exposure to India's largest motorcycle maker, Hero Honda, having teamed up to finance Hero Investment's $852m acquisition of Honda’s stake in the company.

Private equity firm Bain Capital and Singaporean sovereign wealth fund GIC are to invest in India’s Hero Investments to help it finance the buyout of a 26 percent stake in Hero Honda, the joint venture between Japanese automaker Honda and India’s Hero Group.

According to a statement filed on the Bombay Stock Exchange, Hero Investments is to acquire the stake owned by Honda for $851.8 million, paying INR739.97 per share. The shares of Hero Honda were trading at INR1,518.15 at the time of writing. In fact, a Financial Times report in early February suggested the deal could be worth up to $1.75 billion.

The sale brings an end to the long bidding war, precipitated in September last year, when global private equity heavyweights TPG Capital, Kohlberg Kravis Roberts and The Carlyle Group were reportedly vying to acquire the minority stake. According to a Bloomberg report at the time, Honda had been in talks with Hero Group to dilute its stake for more than a year.

The investment by Bain and GIC will be used to reduce a portion of debt raised to buy the Hero Honda stake, according to a Hero Group statement. Exactly how much Bain and GIC are investing in Hero Investments is undisclosed. Bain and GIC did not respond to requests for comment by press time.

According to a Reuters report, Hero Group is raising $749 million in debt to fund the buyout.

However, things seemed to be going against private equity when in December Hero’s founding family, the Munjals, agreed to buy Hero Honda out, ending the 26-year joint venture in the process.

Hero Honda is India’s largest motorcycle maker, with manufacturing sites across three facilities in Gurgaon, Dharuhera and Haridwar. It sold 4.4 million vehicles last year.