Vattikuti Bets ₹50 Crore on Hero FinCorp Ahead of IPO; Issue Size Slashed to ₹1,790 Cr

India’s unlisted market continues to buzz with activity as Hero FinCorp, the financial services arm of Hero MotoCorp, edges closer to its highly anticipated IPO. The company has made headlines again with its Pre IPO Shares Round 2, attracting a notable ₹50 crore infusion from Nandkumar Vattikuti, a prominent investor with a strong portfolio in tech and healthcare. This development comes alongside a significant adjustment in the IPO plan — a reduction in the fresh issue size to ₹1,790 crore.

This latest move has heightened interest in pre IPO shares of Hero FinCorp, especially among high-net-worth individuals (HNIs), private investors, and institutional buyers who are increasingly seeking opportunities in the unlisted shares space.

Pre IPO Shares: A Gateway to High-Growth Opportunities

Pre IPO shares refer to the equity of a private company sold to investors before the company goes public. These are typically made available in funding rounds that take place months or even years before the IPO. Investors in pre IPO shares hope to capture gains when the company lists on the stock exchange, often at a premium.

The allure of pre IPO shares lies in their potential for substantial returns. For companies like Hero FinCorp — backed by strong promoters, growing financials, and a clear roadmap — the demand for these shares is immense in the unlisted market.

Hero FinCorp: A Rising Star in the NBFC Space

Hero FinCorp, an NBFC (non-banking financial company), offers a range of retail and corporate loans, including two-wheeler finance, SME loans, loan against property (LAP), and personal loans. With a solid presence across urban and rural India, the company serves over 5 million customers and boasts a wide network of over 4,000 touchpoints.

As of FY2024, Hero FinCorp’s AUM (Assets Under Management) had crossed ₹40,000 crore, and the company reported strong revenue growth, improving asset quality, and a renewed focus on digital lending platforms.

These credentials make Hero’s unlisted shares particularly attractive for investors looking to get in before the public listing. The recent ₹50 crore investment by Nandkumar Vattikuti further cements investor confidence in the company’s prospects.

Vattikuti’s ₹50 Crore Infusion: A Strategic Signal

The participation of Nandkumar Vattikuti in Hero FinCorp’s Pre-IPO Round 2 is a strong signal of strategic faith. Vattikuti, a tech entrepreneur and seasoned investor, has a long history of identifying high-potential ventures. His investment validates Hero FinCorp’s business model and adds further credibility to the unlisted shares currently circulating in the grey market.

Notably, this is not just a passive bet. Strategic investors like Vattikuti often bring value beyond capital — including advisory, technology enablement, and business strategy insights — all of which could benefit Hero FinCorp in the lead-up to its IPO.

Fresh Issue Size Cut to ₹1,790 Crore: What It Means

In an important update, Hero FinCorp has decided to reduce the size of its fresh issue from ₹4,000 crore to ₹1,790 crore. This decision follows its successful Pre-IPO funding rounds, which helped the company secure significant capital even before hitting the public markets.

This strategic reduction reflects three major factors:

1. Improved Capital Adequacy: Thanks to strong pre-IPO funding, Hero FinCorp may no longer need to raise as much fresh capital in the public issue. The capital adequacy ratio is now more comfortable, reducing dependence on IPO proceeds.
2. Market Conditions: Given the volatility in equity markets, reducing the issue size can help improve the IPO’s valuation and avoid dilution of existing shareholders.
3. Investor Confidence: When a company secures marquee investors pre-IPO, it sends a strong signal to the market. This builds momentum and can help the IPO sail through at attractive pricing.

Why Hero FinCorp’s Unlisted Shares Are in Demand

The unlisted shares of Hero FinCorp are currently trading actively in the grey market. Here’s why demand is spiking:

• Strong Promoter Group: Backed by Hero MotoCorp, the company has deep resources, robust governance, and brand equity.
• Solid Financials: Improving profitability, reduced NPAs, and growing AUM make it a solid NBFC play.
• IPO Trigger: The announcement of a reduced fresh issue and successful Pre-IPO funding increases the likelihood of a near-term IPO, which often results in a rerating of unlisted shares.
• Early Entry Point: For HNIs and family offices, acquiring pre IPO shares offers a rare chance to enter at lower valuations before listing gains take effect.

Risks and Considerations in Buying Pre IPO Shares

While the benefits of investing in pre IPO and unlisted shares are compelling, investors must also consider the risks:

• Liquidity Concerns: Unlike listed stocks, unlisted shares do not have a regulated exchange. Buying and selling depend on private brokers and informal markets.
• Regulatory Risk: SEBI regulations on lock-in periods and share transfers can affect liquidity post-IPO.
• Valuation Risk: Pre IPO shares are often priced on future expectations, making them vulnerable if the company underperforms.
• Delayed Listing: Though Hero FinCorp seems IPO-ready, there’s always a chance of delays due to market conditions or regulatory hurdles.

Therefore, due diligence, a long-term perspective, and buying through reputed intermediaries are key.

Market Outlook: What’s Next for Hero FinCorp?

With the IPO size trimmed and strategic investors on board, Hero FinCorp appears well-positioned for a successful listing, likely within the next few quarters. Analysts believe that the company may aim for a valuation north of ₹20,000 crore, depending on market appetite.

Investors holding Hero FinCorp’s unlisted shares may expect a 1.5x–2x return on listing, though this will depend on pricing, market sentiment, and financial performance at the time of the IPO.

Conclusion: A Pivotal Moment in India’s Unlisted Market

Hero FinCorp’s Pre-IPO Round 2 marks a pivotal moment in India’s rapidly maturing unlisted and pre IPO shares ecosystem. The ₹50 crore infusion by Vattikuti underscores investor confidence, while the reduction in fresh issue size to ₹1,790 crore reflects strategic financial planning and market awareness.

For investors looking to tap into India’s next wave of IPOs, Hero FinCorp offers a compelling story — blending strong fundamentals, marquee investor backing, and imminent listing potential. As always, informed investing and a risk-calibrated approach are essential when navigating the unlisted space.