Hyundai Motor India seeks regulatory approval for a landmark IPO, potentially raising $2.5-$3 billion, and boosting its market presence.
Hyundai Motor India has taken a major step towards becoming a publicly traded company. On Saturday, the company sought regulatory approval for a stock market listing in Mumbai, which could become India’s largest initial public offering (IPO). This move will see Hyundai’s South Korean parent company sell up to 17.5% of its stake in the Indian unit.
Highlights;
- Hyundai Motor India seeks regulatory approval for a major IPO in Mumbai.
- Potential $2.5-$3 billion IPO could be India’s largest in two decades.
- Hyundai aims to boost market position and brand visibility in India.
- Investment plans include $4 billion over the next decade for expansion and EV market growth.
If successful, Hyundai Motor India will be the first car maker to go public in India in two decades since Maruti Suzuki’s IPO in 2003. This comes at a time when Indian stock markets are experiencing near-record highs.
Hyundai’s Investment in India
India is a key market for Hyundai, where the company operates two manufacturing units and has invested $5 billion. Hyundai plans to invest an additional $4 billion over the next decade. India, the world’s third-largest car market after China and the U.S., is Hyundai’s third-biggest revenue source globally.
Hyundai Motor India Details of the IPO
While the draft prospectus filed did not specify the pricing or valuation, sources suggest Hyundai aims to raise between $2.5 to $3 billion, with a potential valuation of up to $30 billion. Unlike many IPOs, Hyundai will not issue new shares. Instead, its South Korean parent company will sell part of its existing stake through an “offer for sale” route, allowing retail and other investors to buy in.
This listing is expected to strengthen Hyundai Motor India’s market position against competitors like Maruti Suzuki and Tata Motors. It will also make future fundraising easier by reducing dependency on the South Korean parent.
The South Korean parent will sell up to 142 million of the total 812 million shares, or 17.5%, in the IPO. However, the final percentage sold could be lower. This IPO aims to unlock the value of Hyundai’s Indian operations and help the Korean automaker improve its valuation compared to global peers.
India’s stock market has doubled in value from 2019 to 2023, surpassing Hong Kong to become the world’s fourth-largest. This has generated significant interest in large IPOs.
Strategic Goals
Hyundai plans to use the IPO to enhance its brand visibility and provide liquidity for its shares. Although the company did not provide a timeline, India’s market regulator typically takes three to six months to process IPO applications.
Moving forward, Hyundai intends to focus on selling more premium cars, increasing its share in the electric vehicle market, and adding charging stations. The company also aims to bolster its role as an export hub.
Impact on India’s Automotive Industry
Indian Prime Minister Narendra Modi views the automotive industry as crucial for economic growth. His government has been building extensive road networks and offering incentives to car manufacturers to increase local production, especially for electric vehicles.
Hyundai has been in India for 28 years, gaining popularity with affordable models like the Santro and Creta SUV. The company has plans to launch new electric vehicles and set up charging stations and a battery pack assembly unit.
Advisors for the IPO
Hyundai is receiving advice on the IPO from investment banks Citi, JP Morgan, HSBC, Morgan Stanley, and India’s Kotak.
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