Bain, GIC investment to merge with Hero MotoCorp

The private equity-backed investment arm of India-based Hero Group intends to merge with fellow group subsidiary, Hero MotoCorp.

India-based automaker Hero MotoCorp is to merge with Hero Investment – the investment arm of its holding company, the Hero Group, according to a company statement. The deal is still subject to approval by the Delhi High Court, creditors and shareholders.

In the transaction, existing shareholders in the investment arm, Bain Capital and the Government of Singapore Investment Corporation, will take direct stakes in the motorbike manufacturer. Bain will own 8.5 percent of the business, with GIC taking a 3.7 percent stake. 

Simultaneously, the auto parts business revealed its plans to open two new manufacturing plants in India, contributing to its aggressive growth plans going forward. The business plans to invest INR25 billion (€360 million; $448 million) in the expansion, its largest ever investment, according to the firm.

Shareholders Bain and GIC must approve the transaction for the merger to go ahead. 

Last year, the pair invested a combined INR3650 crore in Hero Investments to help finance the Munjal family’s 26 percent buyout of Hero Honda, the joint venture between Japanese automaker Honda and India’s Hero Group. 

Bain and GIC invested through respective affliliates BC India Partners and Lathe Investment. The deal was the biggest in India during 2011, PE Asia reported earlier. 

GIC, one of Asia’s most prominent LPs, has been ramping up its investment strategy in India recently. In April last year, the Singaporean sovereign wealth fund opened an office in Mumbai as its first presence in India. 

At the time, GIC deputy chairman and executive director Tony Tan said in a statement, “The setting up of the India office demonstrates GIC’s commitment to secure a larger role in the Indian growth story.”