Hero Honda may give minor stake to Bain Capital and GIC

Wednesday 02 February 2011, 00:00 AM by Vikas Yogi

Since the split-up of world’s top selling two wheeler group, Hero-Honda, there have been a lot of movements and actions by Munjal family which now has sole control in the company. Right After Honda announced its exit from the JV, Hero ended up with an additional 26% in the firm. Now, Financial times reports that two companies, Bain Capital- a US based firm for private equity, and Singapore Investment Corporation (GIC) are likely to buy a minor stake in Hero Honda, spending about USD 1.75 billion.

The duo Hero and Honda had created history in two wheeler industry; they grew into the best selling brand of the world and proved to be the dominant player in the market year after year. Now, as the partnership comes to an end after 26 years, the entire industry watches these two biggies with keen interest.

Individually too, both Groups have earned great reputation and trust. Honda set up its separate unit, HMSI (Honda Motorcycle and Scooter India) in the year 1999 which has been doing well . Therefore, a healthy competition is expected to exist between these two.

As per the disengagement agreement, Hero can transfer to minor stakes to other companies; however they are bound to remain the largest shareholder.