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South Korean auto giant Hyundai Motor Co’s Indian arm, Hyundai Motor India Limited, is gearing up to file draft papers with market regulator Sebi to raise around $3 billion via an initial public offer (IPO), according to multiple sources.

The targeted valuation for the IPO is between $18 billion and $20 billion, which could make it the largest IPO in India’s history.

Potential record-breaking IPO

If the listing plans are successful, it will surpass the previous record set by the state-owned Life Insurance Corporation (LIC) of India’s $2.7 billion listing in 2022.

“The plan is for the e-filing of the draft red herring prospectus to be done today (June 14) with Sebi in the second half. But it may spill over depending on the pace of finishing touches. The issue is entirely an offer for sale (OFS) by the parent, which is expected to sell 140 million to 150 million shares,” said one of the sources.

Two other sources confirmed the same timeline. Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital, and Morgan Stanley are the investment banks advising on the transaction, with law firm Shardul Amarchand Mangaldas acting as the company counsel.

Financial performance and market position

Hyundai Motor India Limited was India’s second-largest carmaker after Maruti Suzuki in FY24 in terms of passenger sales volumes.

The share price of rival Maruti Suzuki India has risen by 24.35% in the last six months, with a market cap of around Rs 4,00,000 crore or nearly $48 billion.

Hyundai’s India unit ended FY23 with revenue of Rs 60,000 crore and profits of Rs 4,653 crore, making it the highest amongst the non-listed car manufacturers in the country, according to Autocar Professional.

India accounted for around 13 percent of Hyundai’s global sales in 2023, with models like the i20, Verna, Creta, Aura, and Tucson contributing to its success. The India unit also recorded its highest-ever domestic sales in 2023, crossing the six-lakh mark.

Global and strategic context

The Economic Times first reported Hyundai’s India listing plans on February 5.

Responding to media reports, Hyundai Motor Co issued an official statement to the Korean Stock Exchange on February 7, stating that it is constantly reviewing various activities, including listing overseas subsidiaries, to increase corporate value, but nothing had been confirmed to date.

Hyundai Motor Group’s Executive Chair, Euisun Chung, visited India last month to review the firm’s mid to long-term mobility strategies.

This visit underscores the strategic importance of the Indian market for Hyundai and its plans to solidify its presence and leverage growth opportunities in the region.

Investment implications

The planned IPO reflects Hyundai’s confidence in the Indian market and its commitment to expanding its footprint. With significant revenue and profit figures, the company is poised to attract considerable investor interest.

The involvement of prominent financial advisors and the strategic review by the company’s leadership further highlight the importance of this move for Hyundai’s global strategy.

As Hyundai Motor India moves forward with its IPO plans, market participants will closely watch the developments, given the potential impact on the Indian automotive industry and the broader market.

The success of this IPO could set a new benchmark for future listings in the country, demonstrating the growing attractiveness of the Indian market to global investors.

With the filing expected to be completed soon, the focus will shift to the response from investors and the market, setting the stage for what could be a historic IPO for India Inc.

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