NEW DELHI: On Saturday, Hyundai Motor’s Indian unit applied for a stock market listing in Mumbai. This could become the biggest IPO (initial public offering) in India’s history, with the South Korean parent company planning to sell up to 17.5% of its stake.
First Major Car Maker IPO in 20 Years
This IPO will make Hyundai the first car maker to go public in India in two decades since Maruti Suzuki did so in 2003. It comes at a time when Indian stock markets are reaching near-record highs.
India is a key growth market for Hyundai, where the company operates two manufacturing plants and has invested $5 billion. Hyundai has also pledged an additional $4 billion investment over the next ten years. Globally, after China and the U.S., India is Hyundai’s third-largest revenue source.
The draft prospectus filed by Hyundai did not disclose details about the IPO’s pricing or the company’s valuation. However, sources told Reuters that Hyundai aims to raise around $2.5-$3 billion, valuing the company at up to $30 billion.
South Korean Parent to Sell Stake
As India’s second-biggest car maker after Maruti Suzuki, Hyundai will not issue new shares in the IPO. Instead, its South Korean parent will sell part of its existing stake through an “offer for sale” route. This move is expected to strengthen Hyundai Motor India’s position against competitors like Maruti Suzuki and Tata Motors. It could also make it easier for Hyundai to raise funds in the future without relying on its Korean parent company.
Hyundai believes the listing will improve its brand image and visibility and provide liquidity for the shares, as stated in the draft prospectus.
Focus on Affordable Cars and Growth
Indian Prime Minister Narendra Modi views the automotive industry as vital for boosting the world’s fifth-largest economy. His government has built new roads and is encouraging car makers to increase local manufacturing, especially of electric vehicles.
Since entering India 28 years ago, Hyundai has won over customers with affordable cars like the Santro and the Creta SUV. The company also plans to introduce new electric vehicles and establish charging stations and a battery pack assembly unit.
The South Korean parent plans to sell up to 142 million out of the total 812 million shares, which equals 17.5% in the IPO. However, the final percentage could be lower, according to sources.
Market Potential
Through the IPO, Hyundai aims to unlock value for its Indian business and help the Korean parent company improve its valuation compared to global and Asian competitors. Indian stock indices have doubled between 2019 and 2023, while Seoul’s KOSPI index has only increased by 30% over the same period.
Earlier this year, India’s stock market overtook Hong Kong’s to become the world’s fourth-largest, and there is growing interest in large IPOs.
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