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SYDNEY
Hyundai Motor India Ltd, the Indian subsidiary of South Korean automotive giant Hyundai Motor Company, is set to make history as it launches its initial public offering (IPO) in Mumbai on Monday. The USD 3.3 billion share sale is poised to become the largest ever in India's corporate history, underscoring the robust health of the country's capital markets and Hyundai's significant presence in one of the world's fastest-growing automotive markets.
According to regulatory filings, the IPO will commence with institutional investors being able to place their bids starting Monday, while retail and other investors can participate on Tuesday and Wednesday. The eagerly anticipated listing is scheduled for October 22 on the Mumbai stock exchange, marking a pivotal moment for both Hyundai and India's financial markets.
The scale of this IPO is remarkable not just within India but on a global stage. At USD 3.3 billion, it stands as the second-largest IPO worldwide in 2024, trailing only behind Lineage Inc's USD 5.1 billion U.S. offering in July. This positioning highlights India's growing prominence in the global financial landscape and its appeal to international investors.
In a strategic move, Hyundai Motor Company, the South Korean parent, will sell up to 17.5% of its stake in the wholly-owned Indian unit. Notably, no new shares will be issued as part of this IPO. The offering comprises 142,194,700 shares priced within a band of 1,865 to 1,960 rupees per share. This pricing structure values Hyundai India at an impressive USD 19 billion, representing approximately 40% of its parent company's market capitalisation – a testament to the Indian subsidiary's significant contribution to Hyundai's global operations.
The timing of this IPO aligns with a period of unprecedented activity in India's capital markets. So far in 2024, 260 companies have collectively raised over USD 9 billion, already surpassing the total of USD 7.42 billion raised in the entirety of the previous year, according to data from LSEG. This surge in IPO activity reflects growing investor confidence in India's economic prospects and its burgeoning corporate sector.
Hyundai India's IPO is set to eclipse the previous record holder, Life Insurance Corporation of India, which raised USD 2.5 billion in its 2022 public offering. The sheer size of Hyundai's offering is indicative of the company's strong market position and future growth prospects in India's competitive automotive sector.
As India's second-largest automaker, trailing only Maruti Suzuki, Hyundai is strategically positioned to capitalise on the country's rapidly expanding automotive market. Analysts suggest that the funds raised through this IPO will likely be channelled towards expanding Hyundai's production capabilities in India, with a particular focus on hybrid and electric vehicles. This aligns with India's growing emphasis on environmentally friendly transportation solutions.
Shin Yoon-chul, an analyst at Kiwoom Securities, commented on the strategic implications of the IPO, stating, "With the funds raised by the IPO, Hyundai Motor would secure a sizable investment capacity to close the market share gap with India's No.1 player Maruti Suzuki as the South Korean automaker would likely invest to expand its production in India." Yoon-chul also noted the timeliness of the IPO, given the strong performance of the auto sector in the Indian stock market.
Hyundai's ambitious plans for the Indian market extend beyond this IPO. The company has announced its intention to launch its first India-made electric vehicle in early 2025, followed by the introduction of at least two gasoline-powered models tailored specifically for the Indian market starting in 2026. These initiatives underscore Hyundai's commitment to strengthening its foothold in India and adapting to evolving consumer preferences and regulatory requirements.
The success of this IPO could have far-reaching implications for both Hyundai and the broader Indian automotive industry. It not only provides Hyundai with substantial capital for expansion but also sets a new benchmark for corporate valuations in India. Moreover, it represents the first time Hyundai will be listed outside its home market of South Korea, potentially opening doors for increased international investment and scrutiny.