Hero MotoCorp, a two-wheeler manufacturer, has approved a proposal to merge the investment arm of its parent into the automaker, the company said, 18 months after it announced its split from Honda Motor.

Private-equity funds Bain Capital and the Government of Singapore Investment Corp (GIC), which helped fund the company's buyout of its former partner Honda last year, will take direct stakes in the company after the merger.

Hero, which sold over 6.2 million motorcycles and scooters in the fiscal year that ended in March, has a market share of around 55 percent in the overall domestic two-wheeler market.

The Munjal family, Hero's promoters, announced in December 2010 that they would buy Honda's 26% stake in the automaker, ending a 26-year-old joint venture partnership.

In March 2011, Bain and GIC, through wholly-owned Indian units, made investments in Hero Investments, a holding company, which were used to help repay debt from the $851 million purchase of the Japanese company's stake.

After the merger, which is subject to approval from the Delhi High Court and shareholders of the companies involved, Bain and GIC will own 8.58% and 3.71% respectively in the automaker, the company said in a statement.

Shares in Hero have risen more than 20% since the Honda buyout was completed in March last year.