Hero Motors IPO: Issue subscribed over 4x so far on Day 3; GMP drops to 4%

New business data points to the fact that The initial public offering (IPO) of automotive parts maker Hero Motors remained in demand on the last day of bidding, with the offering receiving 4.27 times subscription as of 11:10 am on September 18, as per NSE data.

The Rs 1,000-crore IPO received bids for 37,85,13,974 shares against 8,86,07,596 shares on offer. Retail market participants led the demand, with their portion subscribed 6.15 times, while the non-institutional investor (NII) category was subscribed 5.49 times.

The three-day IPO will close today, on September 18. Hero Motors has set the price range at Rs 79-84 per share. The firm is raising Rs 600 crore through a fresh offering, while its promoters, O P Munjal Holdings and Hero Cycles, are offering shares worth Rs 400 crore through an offer for sale (OFS).

Read Additionally: NSE IPO booked 50% so far on Day 2; GMP at 8% — should you apply?

In the grey market, Hero Motors shares were commanding a premium of just over 4 percent on the morning of September 18, according to InvestorGain. The grey market premium (GMP) is an unofficial indicator and can change before the firm's stock lists on the exchanges. It does not guarantee the actual stock-exchange debut price.

Ahead of the IPO opening, Hero Motors boosted nearly Rs 300 crore from anchor market participants. The firm allotted 3.57 crore shares to anchor market participants at Rs 84 apiece, the upper end of its price range.

The anchor book included market participants such as Societe Generale, ICICI Prudential AMC and 3P India Equity Fund, associated with market veteran Prashant Jain.

Of the total anchor allocation, 2.91 crore shares went to seven domestic mutual funds through 16 schemes. ICICI Prudential Life Insurance and Edelweiss Life Insurance were additionally among the market participants in the anchor book.

Hero Motors plans to use Rs 190 crore from the fresh offering towards repayment or prepayment of debt. Another Rs 200 crore has been earmarked for purchasing equipment required for capacity expansion at its Gautam Buddha Nagar facility in Uttar Pradesh. The remaining proceeds will be used for funding inorganic expansion through acquisitions and general corporate purposes.

The IPO is being managed by ICICI Securities, DAM Capital Advisors and JM Financial, while KFin Technologies is the registrar to the offering. The shares are scheduled to be listed on the NSE and BSE, with September 23 as the tentative stock-exchange debut date.

Hero Motors designs and manufactures engineered powertrain solutions for automotive original equipment manufacturers (OEMs), with operations spanning India, the US, Europe and the ASEAN region. Its customers include BMW AG, Ducati Motor Holding, Enviolo International, Formula Motorsport and HWA AG.