According to a Bloomberg report, “This could be the country's biggest IPO (a pure offer for sale by a promoter) after the $2.7 billion listing of state-owned Life Insurance Corporation of India (LIC) in 2022.”
Hyundai's Indian arm had been preparing for the IPO for the past one year by filing a draft red herring prospectus (DRHP) with SEBI, detailing the IPO. Fund raising plans, growth opportunities and other key financial metrics.
Hyundai is the second largest carmaker in India maruti suzukiNo new shares will be issued in the IPO, instead, existing shareholders will sell a part of their stake in the wholly-owned subsidiary to retail and institutional investors through the “offer for sale” route.
This will be an offer for sale by the existing shareholders.
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- The draft prospectus filed does not give any details on the initial public offering price or the company's valuation, but Hyundai aims to raise about $2.5-3 billion at a valuation of up to $30 billion.
- Many other automotive companies including Maruti Suzuki are also included in this.
Mahindra & Mahindra, andTata Motors Have already resorted to capital market to raise funds. - Ride-hailing service provider Ola 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.
- Hyundai has invested $5 billion in its Indian operations over the last few years and has pledged to invest an additional $4 billion over the next ten years.
- The Indian market, which is the third-largest automotive market in the world after China and the United States, is also Hyundai's third-largest revenue generator.
- The decision to list Hyundai Motor India on the stock exchange is expected to strengthen the company's position against competitors like Maruti Suzuki and Tata Motors.
- Going public will also give Hyundai Motor India better access to the capital markets, allowing it to raise funds more easily in the future without relying solely on its Korean parent company.
- Hyundai entered India 28 years ago and set up its first Indian manufacturing plant in 1998 and the second in 2008. Last year, Hyundai Motor Group announced new investment plans worth about five trillion won ($3.75 billion) in India.
- The company intends to sell 142 million shares out of a total of 812 million, which is equivalent to a 17.5% stake. However, there is a possibility that the final percentage could be adjusted downward.
- HMIL, which started operations in India in 1996, currently sells 13 models across various segments.
- In FY24, Hyundai Motor India was the country's second-largest carmaker (in terms of passenger sales volume) after Maruti Suzuki.
- The company reported a 7 per cent year-on-year growth in total sales in May 2024 to 63,551 units as against 59,601 units in the same month last year.
- Additionally, HMIL's exports grew 31 per cent to 14,400 units in May as against 11,000 units in the same month a year ago.
According to the DRHP quoted by IANS, “The object of the offer is to offer for sale up to 142,194,700 (over 142 million) equity shares of face value of Rs 10 each by the promoter selling shareholder and to avail the benefits of listing of the equity shares on the stock exchanges.”
Further, Hyundai Motor India's DRHP states, “Our Company expects that the listing of the equity shares will enhance our visibility and brand image and provide liquidity and public market access for the equity shares in India.”
There have been several Initial Public Offerings (IPOs) in India in the last few years, some of which are as follows:
- Life Insurance Corporation of India(LIC)
State-owned insurer Life Insurance Corporation of India raised about $2.45 billion from an IPO filed in February 2022, the largest ever public offering in the country.
Mobile payments and digital money transfer firm Paytm filed for an IPO in July 2021 and raised $2.19 billion.
State-owned mining company Coal India filed for an IPO in August 2010 and raised about $1.82 billion.
General Insurance Corporation of India
State-owned reinsurer General Insurance Corporation of India had filed for an IPO in August 2017, raising $1.35 billion.
(with inputs from agencies)