NEW DELHI (TIP): The promoters of Hero MotoCorp, India’s largest twowheeler company, are set to raise about Rs 2,000 crore by selling 7 million equity shares, or 3.5% stake, in the flagship entity of their estimated $5 billion (about Rs 31,000 crore) Hero Group in a block deal on Wednesday, a move aimed at raising money for investments in defence and infrastructure.

As per the term sheet of the offer, the Delhi-based Munjal family offered shares in an indicative price band of Rs 2,664 to Rs 2,720 a piece for the deal that was reportedly been arranged by Kotak Mahindra Capital.

After selling seven million equity shares, the family led by Hero MotoCorpBSE 0.88 % chairman BML Munjal, still holds more than 36% controlling stake in the two-wheeler maker. “The group has been looking at the defence sector for quite some time now and has been exploring certain options. Infrastructure, particularly power and adjacent businesses, is another area which has been in the pipeline for some time. The money raised through this block deal will be utilised in these forays,” an industry veteran close to the promoter group said on the condition of anonymity.

Another person close to the Munjals said, “The Hero Group and their flagship company Hero MotoCorp (formerly Hero Honda) have remained debt-free for well over a decade now due to strong management and leadership of the Munjal family.”  “The promoters want to maintain this debt-free status in future as well and, therefore, have deliberately avoided borrowing to fund diversification drive,” the person added.

In a statement, Hero Group said, “The Prime Minister’s ‘Make in India’ platform has opened up new vistas, some in very high-growth areas, and the Hero Group -with its experience, scale of operations and brand equity – is uniquely placed to leverage these emerging opportunities…the group will use the sale proceeds to fund new growth avenues.” 

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At the same time, the group remains strongly committed to its core two-wheeler business, where it sees enormous potential, both in India and overseas.

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