Hyundai Motor’s India unit sought regulatory approval on Saturday for a stock market listing in Mumbai which could be the nation’s biggest and will see the South Korean parent sell a stake of up to 17.5 per cent in the company.
The IPO will make it the country’s first car maker to go public in two decades since Maruti Suzuki in 2003, and would come just as Indian stock markets are trading near record highs.
The proposed IPO is entirely an offer for sale (OFS) of 142,194,700 equity shares by Hyundai Motor Company (HMC), according to the draft red herring prospectus (DRHP).
Hyundai Motor Company is looking to raise at least $3 billion (₹25,000 crore) from the IPO. If this happens, it would be the largest, surpassing that of Life Insurance Corporation (LIC). The life insurer had come out with a ₹22,000 crore float in May 2022.
Hyundai Motor India is the country’s second largest passenger vehicle car maker.
Hyundai counts India as a crucial growth market where it has two manufacturing units 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 US is the company’s third-biggest revenue generator globally.
The decision to go public is also influenced by Hyundai’s strategy to address the ‘Korea discount’, a term used to describe the lower valuation of South Korean firms compared with their international counterparts.
By listing its India arm, Hyundai Motor Company aims to unlock higher valuations and attract a broader investor base.
“The Korean stock market has long encountered a valuation disparity, with lower valuations and inflated risk premiums compared with their global peers. This phenomenon, dubbed the ‘Korea Discount’, can be attributed to several factors, including corporate governance issues, capital allocation practices, and lack of transparency stemming from long-standing, family-run conglomerates, called Chaebols,” said an analyst.
The Hyundai Motor IPO is expected to launch around Diwali 2024 given Sebi takes three to six months to accept or reject a proposal, according to sources.
“This timing aligns with favourable market conditions and the festive season, which typically boosts investor sentiments,” said a market analyst.
Banks such as JP Morgan, Citi, HSBC, and Deutsche Bank along with Kotak Mahindra Capital have been appointed as advisers.
The shares will be listed on the BSE and the NSE.
According to the DRHP, the company is now taking various initiatives which involve an aggregate investment commitment of ₹32,000 crore. It currently serves as a production and export hub for emerging markets for the parent, particularly for passenger vehicle models such as Verna and Venue.
The company has a plant in Chennai, which had an annual production capacity of 824,000 units as of March 31, 2024.
With inputs from Calcutta Bureau
