In keeping with its aggressive plans for fast global expansion, Hero MotoCorp Ltd (HMCL), the world’s largest two-wheeler manufacturer, recently announced its first-ever equity partnership in an overseas company.
Hero MotoCorp, which is targeting to achieve annual sales of 10 million units in the next few years, is investing US$25 million for a total stake of 49.2% in the share capital of its US-based partner Erik Buell Racing (EBR). The first tranche of US$15 million has already been invested by HMCL. The second tranche of US$10 million is proposed to be invested within the next nine months.
The investment in EBR is being done through Hero MotoCorp’s newly-incorporated wholly-owned American subsidiary – HMCL (NA).
Announcing this here today, Mr. Pawan Munjal, Managing Director & Chief Executive Officer, Hero MotoCorp Ltd, said “The equity partnership with EBR is reflective of our long-term vision of transforming Hero MotoCorp to a truly global two-wheeler major with footprints spread across continents, offering a wide range of technologically-advanced two-wheelers. Indeed, this equity partnership is a natural extension of our existing relationship with EBR, which is going to further strengthen our strategic alliance. As we go on spreading our footprint in new international markets, we will look at having extended centres of our own R&D at multiple locations around the world, developing two-wheelers for our global customers. Our evolving relationship with EBR is an initiative in that direction. We will continue to look for both organic and inorganic growth as we keep expanding globally. Our fully-owned new overseas subsidiaries such as the one in the US and in Netherlands will play important roles in our future overseas acquisitions and investments.”
With this equity partnership, Hero MotoCorp will now have representations on the EBR board with two directors and one observer. However, there will be no organizational changes at EBR, and Mr. Erik Buell will continue to be its Chairman and CEO.
Hero MotoCorp and EBR – the East Troy, Wisconsin-based firm – joined hands in a strategic alliance last year, under which HMCL receives support in terms of cutting-edge technology and design to develop future models from EBR, which specializes in designing and manufacturing powerful and high-speed motorcycles.
Through this alliance, Hero MotoCorp has also for the first time entered the exciting world of international motorcycle racing. The company marked its foray into the racing arena last year by sponsoring two teams: Team Hero and AMSOIL Hero – a first by any Indian two-wheeler company at the AMA Pro Racing National Guard Superbikes Championship. This participation continues this year as well.