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Hero Group Shelling Out Loads Of Money?
The procurement may yield Rs4500 crore for Hero group to meet the amount for settling 26% share of Honda, each share costing Rs739.97. Honda is in possession of 51918750 shares in Hero Honda Motors and the amount for these share accounts to Rs3841.83 crore. The closing index price of Hero Honda, after a fall of 0.77%, stood at Rs1518.15 per share. In addition there are definitive agreements made with PE firm BC India Private Limited (an affiliate of Bain Capital LLC), a wholly subsidiary of the Singapore Government"s Investment Corp.
Once Hero group finished the deal with Honda, then it will accrue funds by way of selling the purchased stakes to the PE firms with the official approval hinted at Rs4500 crore.( the Cabinet has to give its nod for foreign investment exceeding Rs1200 crore). Hero Investment Private Limited has the largest share in Hero Honda, 17.33%.
The Hero group said all information will be publicized after getting the approval from the government. The top priority is to clear off the debts borrowed for closing the deal. Some analysts in the finance sector believe that the investment made from PE firms may transform into long term investment. This has become necessary since Hero Group may have to face fierce competition from its erstwhile partner and Bajaj, both in the domestic and in the overseas markets.
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