The Hero Group also said it will raise fund from private equity firms, including Bain Capital and Lathe Investment, estimated to be around Rs4,500 crore to finance its buyout by selling stake in Hero Investments Private Limited
New Delhi: The BM Munjal-led Hero Group today said it will pay Rs3,841.83 crore for Honda's 26% stake in their joint venture Hero Honda, reports PTI.
The group also said it will raise fund from private equity firms, including Bain Capital and Lathe Investment, estimated to be around Rs4,500 crore to finance its buyout by selling stake in Hero Investments Private Limited (HIPL).
"HIPL, an investment company of the Hero Group stated that it is acquiring Honda's entire 26% stake in HHML at Rs739.97 per share," the group said in a statement.
Honda currently holds 51,91,8750 shares in Hero Honda and at the said share prices, the total value of the buyout amounts to Rs3,841.83 crore.
The Hero Honda scrip closed the day at Rs1,518.15 per share on the Bombay Stock Exchange (BSE), down 0.77% from the previous close.
The Hero group further said it has also signed definitive agreements with PE firms BC India Private Investors II, an affiliate of Bain Capital LLC, and Lathe Investment Private Limited, a wholly-owned subsidiary of the Government of Singapore Investment Corporation (Ventures) Pvt Ltd.
HIPL will sell stakes to the PE firms to raise funds for acquiring Honda's stake in Hero Honda, it added.
While the group did not disclose the amount to be raised from the PE firms, HIPL had sought government approval to bring in foreign investment of Rs4,500 crore.
HIPL is one of the main shareholders of the country's largest two-wheeler maker Hero Honda. It holds 17.33% stake in the company as on 31 December 2010. The Foreign Investment Promotion Board (FIPB) had recommended the proposal to the Cabinet Committee for Economic Affairs (CCEA) for approval as it involves foreign investment exceeding Rs1,200 crore.
"Further details will be shared after receiving the necessary approval from CCEA. The funds received as investment made in the holding company by the PE firms will be used to retire a significant portion of the debt that has been raised by HIPL recently for financing the acquisition," the Hero group said.
According to a sector analyst, the share price for the buyout is in line with indications given before and for the PE firms this is a long term investment.
"The Hero Group has long term plans both in the domestic and international markets but will have to face stiff competition from Honda which is becoming aggressive itself in the economy segment and Bajaj is already a tough competitor," the analyst said.
Last year the Hero Group and Honda agreed to part ways from their joint venture after 26 successful years.
There have been discords brewing up between the partners ever since the Japanese firm decided to enter the Indian two-wheeler market through its wholly-owned subsidiary Honda Motorcycle & Scooter India (HMSI).
Moreover, the Hero Group was also unhappy with restrictions over exports as Hero Honda was not allowed to explore overseas markets.
Hero Honda manufactures motorcycles such as Splendor, Passion, Karizma ZMR, Hunk, CBZ Xtreme and scooter Pleasure.
Mirae's new scheme will try to take advantage of rising consumption in India and China. There are too many problems with this idea
How comfortable would you be about putting money in a scheme that will put as much as 35% of your money in unpronounceable Chinese names with unknown corporate governance norms?
Mirae Asset Global Investments (India) today announced the launch of Mirae Asset India-China Consumption Fund, an open-ended, equity-oriented scheme. Although there are many schemes that promise to invest abroad, this scheme, the first-of-its-kind in India, will focus on sectors and companies benefiting from the consumption-led demand that is driving the world's fastest-growing economies, India and China.
The investment theme is attractive on paper. After all, on a per-capita basis, China is still one of the poorest countries on the planet. It doesn't even make the top 100. The Chinese government's investment plans are nothing if not grand. They include a 2 trillion yuan ($250 billion) splurge on railways-including several new subway lines in Shanghai-in the next five years, 25,000 kilometres of expressways by 2010, and an additional 21 nuclear power stations by 2020.
All this may make for great headlines and even be a good case for direct investments case, what has all this got to do with stock picking? Here is one data to chew on. Over the last 10 years, India's Sensex has gone up by 4.29 times and Shanghai is up just by 0.5 times. Nobody can say that China is not booming. So why is its stock market down in the dumps, unable to beat inflation?
There are many excellent equity diversified schemes in India to invest in. The risks of investing through a Korean fund manager into Chinese stocks is something you can do without.
The scheme will use a customised benchmark index that constitutes MSCI India Consumption Index (65%) and MSCI China Consumption Index (35%). The scheme does not guarantee or secure any returns, the investment company said.
The market is waiting for more positive or negative news to decide which way to move
Resuming its upmove after a day's pause, the Indian market opened with modest gains as the political situation at the Centre showed signs of easing, after the DMK decided to put on hold the resignation of its six ministers in the UPA government.
Capital goods, auto and healthcare stocks supported early gains, although profit booking at higher levels resulted in the market giving up some gains. Trading was range-bound, with no big trigger to guide the indices. However, a fresh bout of buying in the last hour lifted the indices to the day's highs, and the indices closed near those levels.
The market was up today, making up more than half the losses suffered yesterday. The Sensex and Nifty opened with a positive gap at 18,277 and 5,466, respectively, which were the lows of the day. After the initial gains, the market was lack-lustre throughout the day. Towards the end of the day, the benchmarks hit intra-day highs of 18,467 and 5,531, respectively. The Sensex closed 217 points up at 18,440, while the Nifty ended 58 points up at 5,521. The advance-decline ratio on the National Stock Exchange was 1,085:589.
The market breadth on the key indices was tilted in favour of the advancing stocks. The Sensex closed with 25 gainers, four losers and one stock remained unchanged. The Nifty had 39 advancing stocks, 10 declining stocks and one stock was flat. Among the broader indices, the BSE Mid-cap index gained 0.97% and the BSE Small-cap index rose 0.76%.
The BSE TECk index (up 1.98%) was the top sectoral gainer, followed by BSE IT (up 1.90%), BSE Metal (up 1.49%), BSE Bankex (up 1.48%) and BSE Realty (up 1.35%). There were no losers in the sectoral space today.
Bharti Airtel (up 3.16%) was the top Sensex gainer. Other major gainers were Tata Motors (up 2.91%), ONGC (up 2.90%), Infosys Technologies (up 2.53%) and Jaiprakash Associates (up 2.37%). The main laggards on the index were Hero Honda (down 0.77%), Maruti Suzuki (down 0.65%) and ITC (down 0.35%).
India aims to add about 15,000MW of generation capacity in the current financial year, taking the total capacity to over 1.75 lakh MW by the end of this month. However, the capacity addition is less by about 5,000MW against the targeted generation capacity of 20,359MW in 2010-11, missing the target of the 11th Five Year Plan for the fourth consecutive year, power minister Sushil Kumar Shinde has admitted.
Markets in Asia settled with gains on speculation that the crisis in the Middle East might ease, following media reports that Libyan leader Muammar Qaddafi has offered to relinquish power. The reports also gave an indication of softening crude prices.
This apart, M&A news lifted the Japanese market. Hitachi advanced on the sale of its hard disk drive operations to US-based Western Digital for around $4.3 billion, while Terumo Corp rose on its purchase of US medical device firm CaridianBCT for $2.6 billion.
The Shanghai Composite gained 0.15%, the Hang Seng jumped 1.71%, Jakarta Composite rose 0.52%, the KLSE Composite added 0.13%, the Nikkei 225 advanced 0.19%, the Straits Times surged 1.22%, the Seoul Composite rose 0.81% and the Taiwan Weighted settled 0.39% higher at close of trade.
Oil fell for the first time in three days on speculation that the conflict in Libya may subside, which eased concerns over supply disruption. Crude for April delivery fell $2.11 to $103.33 a barrel in electronic trading on the New York Mercantile Exchange, and was at $104.02 in post-noon trade in Singapore. Yesterday, the contract settled at $105.44, the highest since 26 September 2008. Prices are up 27% from a year ago.
Brent crude for April settlement tumbled as much as $2.25, or 2%, to $112.79 a barrel on the London-based ICE Futures Europe exchange.
Back home, foreign institutional investors were net sellers of stocks worth Rs92.24 crore on Monday, while domestic institutional investors were net buyers of equities worth Rs45.57 crore.
Tata Communications (1.04%) today announced the launch of cloud offering, InstaCompute, an infrastructure as a service (IaaS) model, in Singapore. This service also covers neighbouring countries, such as Malaysia, Hong Kong, Thailand, Indonesia, Vietnam and the Philippines.
According to the company, InstaCompute will bring scalable cloud-computing services to the region's large and medium enterprises, gaming industry, as well as global businesses which have an Asia-Pacific audience.
HCL Technologies (up 2.29%), a leading global IT services provider, and Orion Edutech, Asia's leading BPO training institute have jointly announced the launch of a unique and innovative initiative to address the emergent issue of talent in the BPO industry. This programme, Orion Diploma in BPO Management, bolsters HCL's strategy to provide customers with the next generation business services delivered by a world-class pool of talent.
Bharti Airtel (3.16%), India's largest telecom services provider, today launched its third generation 3G services in Mumbai. The company already launched 3G services in Bengaluru, Chennai, Coimbatore, Mysore, Manipal, Udupi, Jaipur and Delhi NCR. The company is committed to launch its 3G services in all 13 circles where it has obtained licences by this month-end.