Shares of two-wheeler giant Hero Honda raced up by nearly 4% in early trade on the BSE, a day after the FIPB referred Indian promoter Hero's proposal to raise Rs 4,500 crore to the Cabinet Committee on Economic Affairs for clearance.
The promoters of Hero Investments Pvt Ltd (HIPL), the Munjals are looking to raise funds to finance the buyout of Japanese partner Honda's stake in Hero Honda through a stake sale to private equity and foreign funds.
Cheering the development, shares of Hero Honda climbed by 3.73% to an early high of Rs 1,521.60 apiece on the Bombay Stock Exchange.
In a similar fashion, the scrip witnessed a 3.37% surge on the National Stock Exchange to Rs 1,522.
HIPL is one of the main shareholders in Hero Honda, with a 17.33% stake in the company as of December 31, 2010.
In December last year, the promoters of HIPL, the B M Munjal family, had agreed to buy-out the entire 26% stake of Japan's Honda in Hero Honda for an undisclosed sum.
Meanwhile, the 30-share benchmark Sensex was trading 168.17 points lower than its previous close at 18,010.16 at 1017 hours.