SEBI announces that Hero Motors has withdrawn its DRHP for the IPO

On October 5, SEBI confirmed that Hero Motors had withdrawn its DRHP for the proposed initial public offering (IPO). This move comes after the company filed its preliminary papers in August, with plans to raise ₹900 crore through the IPO. The auto-components arm of Hero MotoCorp had aimed to offer a combination of fresh equity shares worth ₹500 crore and an offer-for-sale (OFS) of shares valued at ₹400 crore by its promoters.

IPO details and withdrawal

The OFS was to include ₹250 crore worth of shares from OP Munjal Holdings and ₹75 crore each from Bhagyoday Investments and Hero Cycles. Additionally, Hero Motors had considered a pre-IPO placement of ₹100 crore, which, if completed, would have reduced the size of the fresh issue. However, on October 5, the company decided to withdraw its DRHP without providing a specific reason for the decision.

While this may have disappointed some who were looking to invest in IPOs through Hero Motors' IPO, the company's plans to use the proceeds for debt repayment and equipment purchases for expanding its facility in Uttar Pradesh would have positioned it for further growth.

Industry outlook amid IPO cancellations

Hero Motors is a leading player in automotive technology, with a diverse product range that includes powertrain solutions for two-wheelers, electric and hybrid vehicles, and heavy-duty vehicles. Despite this, the withdrawal of the DRHP raises questions about the timing and market conditions for IPOs in the automotive sector. Those who wish to invest in IPOs should note that the primary market remains robust, with expected IPOs worth over ₹50,000 crore around Diwali, including Hyundai Motor India's highly anticipated offering.

Key takeaways

• DRHP withdrawn: Hero Motors withdrew its DRHP for a proposed ₹900 crore IPO.
• Proceeds usage: The funds were intended for debt repayment and facility expansion.
• Future IPOs: The primary market remains strong, offering various opportunities to invest in IPOs.