BackHyundai Motor India looks to raise $2.5 billion in potentially India's largest IPO
Hyundai Motor India is looking to sell 142.2 million equity shares, representing 17.5% of the post-offer paid-up equity share capital, in what is being seen as the biggest IPO in India after the public listing of LIC in 2022
PremiumHyundai Motor India Ltd. (HMIL) is preparing for a massive initial public offering (IPO) that could set a new record in the Indian stock market. According to the draft red herring prospectus, HMIL will offer up to 142.2 million equity shares, representing 17.5% of the post-offer paid-up equity share capital.
While the exact amount to be raised has not been specified, agency reports suggest that the carmaker aims to raise approximately $2.5 billion to $3 billion, valuing the company at $25-30 billion.
This proposed IPO could surpass the record set by the Life Insurance Corp of India’s $2.46 billion issue in May 2022, making it the largest in the country’s history.
Kotak Mahindra Capital Co Ltd, Citigroup Global Markets India Pvt. Ltd., HSBC Securities and Capital Markets (India) Pvt. Ltd., JP Morgan India Pvt. Ltd., and Morgan Stanley India Co. Pvt. Ltd. are the book-running lead managers of the proposed issue.
Mint reported in April that the Indian arm of South Korean carmaker Hyundai Motor Co. would file a draft red herring prospectus for its $3-3.5 billion IPO in June, aiming to complete its share market listing before Diwali.
Read Here: Hyundai starts setting the stage for India’s biggest IPO
A Hyundai spokesperson declined to comment on the matter.
HMIL, India's second-largest carmaker after Maruti Suzuki, invited analysts to its manufacturing facility in Chennai last month to kick-start its IPO process.
At a time rival Tata Motors has projected an up to 6% increase in its market share by 2030 to account for 20% of all passenger vehicle sales by the end of the decade, investors and analysts will gauge how HMIL, a carmaker that gets over 60% of its sales from sports utility vehicles (SUVs), is positioned in the market's competitive landscape.
HMIL's IPO is a pivotal moment for the carmaker as it aims to list against established automotive giants in the country. The IPO in one of the world’s fastest-growing automotive markets will also allow the company to enhance its market value in response to the South Korean government’s ‘corporate value-up’ programme. The scheme encourages companies to pursue foreign listings to boost their valuations and return more cash to shareholders.
“Listing its India subsidiary in the country indicates a significant potential for value-realisation from the world’s third-largest passenger vehicle market, which has not yet been fully reflected in Hyundai’s overall market valuation," said an industry executive, declining to be identified. “The India listing is projected to allow a re-evaluation of the (company’s) remaining operations and India’s weight in the business, potentially increasing Hyundai’s overall market capitalisation."
While Hyundai is flush with cash at the parent level, the India IPO is also intended to generate additional capital that can be used to enhance shareholder returns through dividend payouts and share buybacks.
Hyundai’s India listing not only affirms its decision to double down on operations in the country—which includes establishing a battery assembly factory and increasing production capacity via its buyout of the General Motors factory in Talegaon, Pune—but also sets a precedent for other Korean companies seeking to expand their investor base and improve valuations through international listings.
Passenger vehicle makers attract rich valuations in India due to surging demand in the domestic market, especially for premium models. Listed Indian auto companies include Maruti Suzuki India (market capitalisation of over ₹4 trillion), Tata Motors ( ₹3.3 trillion) and Mahindra & Mahindra ( ₹3.6 trillion).
Hyundai Motor India has leveraged this consumer preference with utility vehicles such as Creta, Venue and Exter, which accounted for about 60% of its total domestic sales in FY24.
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