New Delhi, Feb. 18: Brijmohan Lall Munjal, the largest investor in Hero MotoCorp, has sold shares worth $300 million in the country's biggest manufacturer of motorcycles and scooters, freeing up cash to invest in new sectors.

Munjal, who owns the shares through several entities, sold nearly a 3.5 per cent stake, or 7 million shares, in multiple open market transactions, lowering the promoter stake to just over 36 per cent from 39.92 per cent.

'(Brijmohan Lall-led parent Hero Group) will use the sale proceeds to fund new growth avenues available through the government's Make in India initiative,' Hero said in a statement.

The company said the Hero group's experience, scale of operations and brand equity have put them in an advantageous position to leverage the opportunities provided by the new government.

Analysts expect the funds to be used for expansion in power and real estate. The shares are seen to be offered in the price range of Rs 2,664 and 2,720 apiece, according to sources.

The promoters held 40 per cent in the company, valued at Rs 21,300 crore, at the end of December 2014.

After today's sale, the over $5-billion Hero group still holds a significant stake of over 36 per cent in the company. Kotak Mahindra Capital was the main arranger to the deal.

Reacting to the news, the Hero MotoCorp stock tanked 5 per cent to Rs 2,663.45 a share on the Bombay Stock Exchange, eroding Rs 2,851.23 crore from its market valuation.

On the National Stock Exchange, the stock was down 4.90 per cent to Rs 2,667.50.

The company's market capitalisation dipped Rs 2,851.23 crore to Rs 53,185.77 crore.

The Hero MotoCorp stock was the top loser among the blue-chips on both the Sensex and the Nifty.

On the focus on its core business, the company said: 'The Hero group remains committed to its core two-wheeler business, where it sees enormous potential, both in India and overseas.'

Hero MotoCorp sold 6.64 million two-wheelers in 2014, including over 200,000 units in the global markets.

In December 2010, the Hero group and Honda had agreed to end their 26-year-old partnership, with the Indian company agreeing to buy out the latter's 26 per cent stake in Hero Honda for Rs 3,841.83 crore.

Private equity role

Earlier, in March 2011, two private equity entities - BC India Investors II and Lathe Investment Pvt Ltd - together picked up a 29 per cent stake in Hero Investments Pvt Ltd, a promoter firm of the two-wheeler maker, for Rs 3,650 crore.

The group had said the funds raised from the PE companies would be used to retire a significant portion of the debt that has been raised by Hero Investments to finance the acquisition of Honda's stake in Hero Honda.