Why Hyundai Motor aims to take Indian unit public
Chung Euisun, third from right in first row, executive chair of Hyundai Motor Group, poses with employees of Hyundai Motor India at the Indian unit’s office in Delhi, April 23. Courtesy of Hyundai Motor Group
Hyundai Motor is expected to debut its Indian unit, Hyundai Motor India, on India's stock market as part of the Korean carmaker's efforts to increase its presence in the world's third-largest auto market, according to the company and industry officials, Sunday.
"Hyundai Motor, which owns a 100 percent stake in its Indian unit, Hyundai Motor India, plans to sell its stake through (initial public offering)," an industry official familiar with the matter said.
Another official also said Hyundai Motor will file a regulatory filing with the Korean Exchange, Monday, about its plan to list its Indian unit on the Indian stock market.
On Friday, Hyundai Motor India filed an application called the Draft Red Herring Prospectus for an IPO with the Securities and Exchange Board of India. In the document, the company said that through the IPO, "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."
The document also showed that Hyundai Motor intends to sell up to 17.5 percent of the shares it held in its Indian unit through the listing. The listing will be the first automaker to go public in India in two decades since Maruti Suzuki in 2003, and Hyundai Motor is estimated to raise around $2.5 billion and $3.5 billion through the IPO.
If Hyundai Motor is successful in raising $3 billion, it will be the largest IPO in India's history. The previous largest IPO was by Life Insurance Corporation of India, which raised about $2.5 billion in 2022.
A model promotes Hyundai Motor’s Exter, a compact SUV manufactured at the carmaker’s Indian factory and a winner of the Indian Car of the Year 2024 award. Courtesy of Hyundai Motor India
The industry view is that Hyundai Motor is working on listing its Indian unit on the stock market there as the country has the world's third-largest car market. Last year, about 4.1 million cars were sold in India, third only to China and the United States.
The company has been focusing on the Indian market since the establishment of its Indian subsidiary in 1996. Currently, it operates two plants in Chennai, and its sister company Kia operates its plant in the southern coastal state of Andhra Pradesh. Last year, Hyundai Motor also signed a deal with General Motors to acquire the latter's plant in Talegaon.
By listing the Indian arm, Hyundai Motor is expected to have a stronger position compared to its competitors as it can raise funds.
"Hyundai Motor will raise 3 trillion won ($2.2 billion) to 4 trillion won through the IPO of its Indian unit. The proceeds from the IPO will be used to expand production capacity in India," said Kim Kwang-soo, a researcher at LS Securities.
"It is already investing in expanding its plants in India, including investing 1.1 trillion won to start operations at its Talegaon plant acquired from GM. The company's stock price is also expected to be reevaluated through the listing of the subsidiary."