Hyundai files for India's largest IPO. Check details of Rs 25,000 crore issue

17/06/2024

Automaker Hyundai Motor's India unit has filed preliminary papers with Sebi for a Rs 25,000 crore public offering in what could be the country's biggest IPO.Â

The firm is the first automaker to file for IPO in 20 years, after Maruti Suzuki went public in 2003.Â The IPO willÂ value the company at around Rs 1.5 lakh crore.Â

Let's look at what all we know about the initial public offering (IPO) of Hyundai Motor's India unit.Â

Sebi approval -Hyundai Motor's Indian division has requested regulatory approval for a stock market listing in Mumbai, aiming to execute what could be India's largest IPO.

Issue type - The South Korean parent company plans to sell up to 17.5% of its stake in this offering.Â

Hyundai, which is India's second-largest car manufacturer after Maruti Suzuki, will not be issuing new shares in its upcoming IPO.

Instead, the current shareholder will reduce its stake in the wholly owned subsidiary by selling shares to both retail and institutional investors via an "offer for sale" method.

Issue size -Â Hyundai Motor plans to sell up to 14.2 crore equity shares in its IPO out of a total of 81.22 crore shares, as stated in the Sebi filing.

IPO price band - Hyundai's draft prospectus does not specify the IPO pricing or the company's valuation. However, media sources indicate that Hyundai aims to raise between $2.5 billion and $3 billion, with a potential valuation reaching up to $30 billion.

If successful, this IPO could become one of India's largest, second only to the Life Insurance Corporation of India's $2.5 billion offering in 2022.

IPO objective -Â Hyundai aims to increase its visibility and brand recognition in India by listing its equity shares on the Indian stock market.

The IPO is designed to create liquidity and establish a public market for the shares. Additionally, this move is intended to unlock the value of Hyundai's Indian operations and help the Korean automaker address its valuation gap compared to its global and Asian competitors.

IPO reservation - No more than 50% of the issued shares will be allocated to qualified institutional buyers (QIBs), at least 35% will be set aside for retail individual investors (RIIs), and a minimum of 15% will be reserved for non-institutional investors (NIIs).

Lead manager - The entities overseeing the book-running for the offer are Kotak Mahindra Capital Company, Citigroup Global Markets India, HSBC Securities and Capital Markets (India), JPMorgan India, and Morgan Stanley India.

Registrar - KFin Technologies is responsible for the issue's registration.

Financial Performance - Hyundai Motor India Limited ranks as the second-largest car manufacturer in India, following Maruti Suzuki in terms of passenger vehicle sales for FY24. In FY23, Hyundai's Indian division reported revenues of Rs 60,000 crore and profits of Rs 4,653 crore, making it the most profitable among non-listed car manufacturers in the country.

Hyundai's background - Hyundai has been in India for 28 years, winning customers over with popular models ranging from the Santro to the SUV Creta. The company is now gearing up to introduce new electric vehicles, build charging stations, and establish a battery pack assembly unit.

Several automotive companies like Maruti Suzuki, Mahindra & Mahindra, and Tata Motors have already raised funds through the capital markets. Ola, the ride-hailing service, has also secured approval from Sebi for its forthcoming IPO.

Hyundia Motor's India unit has unveiled ambitious plans to expand its operations, aiming to boost its annual production in India to one million units by 2025, with a focus on manufacturing affordable electric vehicles locally.

Over the years, Hyundai has invested $5 billion in its Indian operations and has committed to investing an additional $4 billion over the next decade.

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