With this IPO, it will become the first country-based carmaker to go public in two decades after Maruti Suzuki in 2003, and it will come at a time when Indian stock markets are trading near record highs.
Hyundai considers India a key growth market, where it has two manufacturing units and has invested $5 billion, with a commitment to invest another $4 billion over the next decade. The world’s largest car market is the company’s third-largest revenue generator globally, after China and the US.
The draft prospectus filed by Hyundai does not give any details of the initial public offering price or the company’s valuation, but sources have told Reuters that Hyundai aims to raise about $2.5-3 billion at a valuation of up to $30 billion.
Hyundai, India’s second-largest carmaker after Maruti Suzuki, will not issue fresh shares in the IPO, in which its South Korean parent company will sell part of its stake in the wholly-owned entity to retail and other investors through the so-called “offer for sale” route.
The listing is seen to put Hyundai Motor India in a stronger position over Maruti Suzuki, Tata Motors and other rivals as it will make it easier to raise funds in the future without the need to depend on its Korean parent.
Hyundai expects the listing of equity shares in India will “enhance our visibility and brand image” and “provide liquidity and public market availability” for the shares, the company said in a draft prospectus filed on Saturday.
Affordable Cars
Indian Prime Minister Narendra Modi sees the automotive industry as a cornerstone of boosting growth in the world’s fifth-largest economy. His government has built hundreds of kilometres of new roads and is encouraging carmakers to increase local manufacturing, especially of electric vehicles.
Hyundai entered India 28 years ago and has won the hearts of buyers with its affordable cars like the Santro and sports-utility vehicle Creta. The company plans to launch new electric vehicles, set up charging stations and battery pack assembly units.
The South Korean parent company will sell 142 million shares, or 17.5%, of the total 812 million shares on offer in the IPO. Sources have said the final percentage could be lower.
With the IPO, Hyundai aims to unlock value for its Indian business as well as help the Korean automaker get rid of its valuation discount compared to global and Asian peers.
The benchmark Indian stock index is set to double between 2019 and 2023, while Seoul’s KOSPI index is up just 30% over the same period.
India’s fast-growing stock market overtook Hong Kong earlier this year to become the world’s fourth-largest, and interest in big IPOs is growing.
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