Hero Electric aims to raise fresh funds of $200-$300m; looking to tap PE funds

Dec 4, 2021 | News

Six months after closing the first part of its Series B funding round, India’s largest electric two-wheeler maker Hero Electric is evaluating plans to raise fresh capital as demand soars in a booming EV market.

“This time around, they are targeting a bigger amount and are exploring options to raise up to $200m or anywhere between $200m and $300m. The proceeds will go towards capacity building, product development and marketing costs,” said one of the persons cited above.

This person said the plans are not imminent and it was unclear when the firm would hit the market again.

In June, Hero Electric raised around $30m from Gulf Islamic Investments and existing investor OAKS Asset Management (formerly Alpha Capital). Back then, the firm had said the funding would be used to expand its production capacity, consolidate its position in the market, invest in new technologies and enhance its footprint across markets like India.

A second person also confirmed the firm’s fresh fundraising plans.

Get the week’s top news delivered directly to your inbox – Sign up for our newsletter

Sign up

“ESG is the focus track currently for several private equity funds and pension funds and Hero Electric will look to tap them for this new round. These are early days in the deal and preliminary discussions have begun with advisors,” a third person told Moneycontrol.

A fourth person familiar with the firms plans alluded to the fervour in the domestic EV space. “Players don’t want to take any risks and need big dollars to expand and fight competition. Call it the Ola effect,” he said.

Hero Electric counts the likes of Ola Electric, Hero MotoCorp- backed Ather Energy, Okinawa, Simple Energy, TVS Motors and Bajaj Auto as its peers.

In July, Ola Electric CEO Bhavish Aggarwal had announced that the Ola e-scooter had garnered 1 lakh bookings in just 24 hours of opening of pre-launch bookings, making it the ‘most pre-booked scooter’ in the world.

However, since then, the firm has missed delivery timelines citing global chip and electronics shortages. Later in October, it announced that it had raised $200 million in a funding round, taking its valuation to $3 billion. The $1-billion investment by TPG Rise & ADQ in the carved out EV business of Tata Motors in October has also stirred up the domestic electric mobility segment.

All the four individuals above spoke to Moneycontrol on the condition of anonymity.

In response to an email query from Moneycontrol, Naveen Munjal, MD, Hero Electric said, “Hero Electric had recently in the month of June, 2021 closed its first part of Series B funding to expand capacity and invest in newer technologies. The Indian EV industry is currently witnessing its best growth phase owing to conducive policies and rising fuel prices, thereby leading to a phenomenal growth in customer demand.”

Munjal added, “For any company to scale and meet market demand seeking investments are a continuous process. As a market leader and the No. 1 EV brand, Hero is committed to lead the EV transformation in the country and grow as the segment grows.”

Source:  Money Control

Can’t stop reading? Read more