Hero inks PE MoU; firms may have 8-year lock-in

CNBC-TV18 earlier reported that a clutch of six private equity (PE) firms were set to acquire 45% in Hero Investments, which would in turn buyout Honda's stake in Hero Honda along with Bahadur Chand Investments. CNBC-TV18 now learns that the PE players have a lock-in of minimum eight years in Hero Investments. Kritika Saxena lays down an outline of the exit options that have been chartered out so far.

The six PE players have chartered out a detailed exit option with Hero Investments. In fact, sources say that after the deal is signed, the PE players will have an eight-year lock-in period in Hero Investments. This means that they will need to wait for at least eight years to go ahead and look for a stake sale. The PE players include the like of Bain Capital, Carlyle Group, KKR, Government of Singapore, Warburg Pincus and TPG. Not just that, sources have also indicated that Hero Investments has the first right to refusal and there is a buyback option, wherein the Hero Group can buyback the stake that they have sold to these private equity players for around 15% discount to the CMP of Hero Honda.