Hero FinCorp plans general insurance foray
MUMBAI: Hero FinCorp Ltd, the financial services arm of India’s largest two-wheeler maker Hero MotoCorp Ltd, plans to enter the non-life insurance business and is looking to take a controlling stake in a general insurance firm, two people with direct knowledge of the matter said.
Hero FinCorp was until recently in talks with Future Generali—a joint venture between Kishore Biyani’s Future group and Italy’s Generali group—but the talks were not successful, the people mentioned above said on condition of anonymity as the talks are private.
Emails sent to Hero FinCorp and Future Generali remained unanswered until press time.
“The talks failed because of mismatch in valuation,” the first person cited above said, adding that Hero FinCorp had also begun discussions with potential buyers to sell equity stake to raise capital for the acquisition.
Mint had reported in August that Hero FinCorp Ltd was looking to raise up to ₹1,000 crore at a valuation of $1 billion and that it had mandated Credit Suisse to manage the fund raising. The investment bank had approached several large domestic and global private equity funds for a potential investment.
“The company is no longer actively considering a stake sale for now,” said the second person cited above, adding, “but once another target is identified, talks will resume.”
Hero FinCorp, a non-banking financial company (NBFC), is led by Abhimanyu Munjal, younger son of the late Raman Munjal, elder brother of Pawan Munjal, chairman, MD and CEO of Hero MotoCorp. The company, which offers auto loans, loan against property, bill discounting and inventory funding, had a total credit portfolio of close to ₹10,028 crore as on 30 June 2017. The NBFC has set a target of a loan book size of ₹35,000 crore by 2020, Mint reported in September.
Hero MotoCorp has a 40.3% stake in Hero FinCorp, while the rest is owned by other entities of the Hero Group and private equity funds.
Hero FinCorp started its housing finance business last year by incorporating Hero Housing Finance Ltd.
“The foray into the insurance sector is the next step towards becoming a full fledged financial services company like Bajaj Finserv,” said the second person.