Hyundai doubles down on India with IPO that could be country’s biggest
NEW DELHI (Reuters) — Hyundai Motor’s India unit on Saturday sought regulatory approval for a stock market listing in Mumbai that could be the nation’s biggest.
The application calls for the South Korean parent to sell a stake of up to 17.5% in the company.
The IPO would make the Hyundai unit the country’s first carmaker to go public in two decades, since Maruti Suzuki did so in 2003. It would also come with Indian stocks trading near record highs.
Hyundai counts India as a crucial growth market. It has two manufacturing units in the country and has invested $5 billion, with commitments to pump in another $4 billion over the next decade. The world’s biggest car market after China and the U.S. is the company’s third-biggest revenue generator globally.
The Hyundai draft prospectus gives no details of the IPO’s pricing or the company’s valuation, but sources have told Reuters Hyundai aims to raise around $2.5 billion to $3 billion at a valuation of up to $30 billion.
Hyundai, India’s second-biggest carmaker behind Maruti Suzuki, would not issue new shares in the IPO. Instead, its South Korean parent would sell part of its stake in the wholly owned unit to retail and other investors via a so-called “offer for sale” route.
The listing is seen putting Hyundai Motor India on a stronger footing versus Maruti Suzuki, Tata Motors and other rivals as it could make future fundraising easier, without the need to depend on its Korean parent.
Hyundai expects the listing “will enhance our visibility and brand image,” and “provide liquidity and a public market” for the shares, the company said in the draft prospectus filed on Saturday.
It did not provide a timeline for the listing, but typically the Securities and Exchange Board of India takes three to six months to approve, reject or seek more information on IPOs.
The company said it plans to focus on “premiumization” — selling more expensive cars as well as increasing its EV market share and adding charging stations, where it lags behind Tata Motors. Hyundai India also said it wants to ship more cars, “strengthening” its position as an export hub.
Indian Prime Minister Narendra Modi sees the automotive industry as a cornerstone to boost growth in the world’s fifth-largest economy. His government has built hundreds of kilometers of new roads and is incentivizing car makers to increase local manufacturing, especially of electric vehicles.
Hyundai entered India 28 years ago and has won over buyers with its affordable cars such as the Santro and Creta SUV. The company has plans to launch new electric vehicles, establish charging stations and a battery pack assembly unit.
The South Korean parent will sell up to 142 million of the total 812 million shares, or 17.5%, in the IPO. The sources have said the final percentage could be lower.
With the IPO, Hyundai aims to unlock value for the Indian business and also help the Korean automaker shed its valuation discount compared to its global and Asian peers.
Benchmark Indian stock indexes in 2023 were double what they were in 2019. Seoul’s KOSPI index gained 30% over the same period.
India’s burgeoning stock market overtook Hong Kong’s earlier this year to become the world’s fourth-largest, and interest in large IPOs is soaring.
Hyundai is being advised on the IPO by investment banks Citi, JP Morgan, HSBC, Morgan Stanley and India’s Kotak.
