As per a Bloomberg report, “This could be the country’s biggest IPO (a pure offer for sale by the promoter) after the state-owned Life Insurance Corporation of India’s (LIC) $2.7 billion listing in 2022.”
Hyundai’s Indian arm had been preparing for the IPO for the last one year to file the draft red herring prospectus (DRHP) with Sebi, detailing the fund-raise plans, growth opportunities, and other key financial metrics.
Hyundai, India’s second-biggest car maker behind Maruti Suzuki, will not issue new shares in the IPO, instead, the existing shareholder will sell a portion of its stake in the wholly owned subsidiary to retail and institutional investors through an “offer for sale” route.
It will be an offer for sale by the existing shareholder.
Top Developments
- The draft prospectus filed gave no details of the pricing of the initial public offering or the company’s valuation, but Hyundai aims to raise around $2.5-$3 billion at a valuation of up to $30 billion.
- Several other automotive companies, including Maruti Suzuki,
Mahindra & Mahindra, andTata Motors , have already tapped into the capital markets to raise funds. - Ola, a ride-hailing service, has also received approval from Sebi for its upcoming IPO.
- HMIL has announced ambitious expansion plans, aiming to increase its annual production in India to one million units by 2025. The company plans to focus on producing affordable electric vehicles locally.
- Over the years, Hyundai has invested a staggering $5 billion in its Indian operations and has pledged to invest an additional $4 billion over the next ten years.
- The Indian market, which ranks as the third-largest automotive market globally after China and the United States, is also Hyundai’s third-biggest revenue generator.
- The decision to list Hyundai Motor India on the stock exchange is expected to strengthen the company’s position against its competitors, such as Maruti Suzuki and Tata Motors.
- By going public, Hyundai Motor India will have better access to capital markets, enabling it to raise funds more easily in the future without relying solely on its Korean parent company.
- Hyundai entered India 28 years ago and established its first Indian manufacturing plant in 1998 and a second one in 2008.Over the past year, Hyundai Motor Group has announced new investment plans in India totalling approximately five trillion won ($3.75 billion).
- The company intends to sell up to 142 million shares out of the total 812 million, representing a 17.5% stake. However, there is a possibility that the final percentage could be adjusted downward.
- HMIL, which commenced operations in India in 1996, currently sells 13 models across various segments.
- In FY24, Hyundai Motor India was the country’s second-largest carmaker after Maruti Suzuki (in terms of passenger sales volumes).
- The company reported a 7 per cent year-on-year increase in total sales at 63,551 units in May 2024, compared to 59,601 units in the corresponding month last year.
- Additionally, HMIL’s exports grew by an impressive 31 per cent in May, reaching 14,400 units compared to 11,000 units a year ago.
“The objects of the offer are to carry out the Offer for Sale of up to 142,194,700 (over 142 million) Equity Shares of the face value of Rs 10 each by the Promoter Selling Shareholder and to achieve the benefits of listing the Equity Shares on the Stock Exchanges,” according to the DRHP quoted by IANS.
Further, “our Company expects that listing of the Equity Shares will enhance our visibility and brand image and provide liquidity and a public market for the Equity Shares in India,” Hyundai Motor India’s DRHP added.
India witnessed several Initial Public Offerings (IPOs) over the years, with some of them are:
- Life Insurance Corporation Of India (LIC)
State-owned insurer Life Insurance Corp of India raised about $2.45 billion from an IPO filed in February 2022, the largest public float in the country so far.
Paytm, a mobile payments and digital money transfer firm, filed for an IPO in July 2021 and raised $2.19 billion.
State-run miner Coal India filed for an IPO in August 2010 and raised nearly $1.82 billion.
General Insurance Corp Of India
State-run reinsurer General Insurance Corp of India filed in August 2017 for an IPO that raised $1.35 billion.
(With inputs from agencies)
