Hyundai Motor India's $3.3 Billion IPO

By Scott Murdoch, Heekyong Yang and Kashish Tandon

SYDNEY/SEOUL (Reuters) – Hyundai Motor India sold shares worth $989.4 million to institutional investors including BlackRock and Fidelity on Monday, launching a $3.3 billion IPO, aiming to be the country's largest share offering yet.

The Government of Singapore and BlackRock acquired stakes worth $77.3 million, while Fidelity purchased shares worth $76.5 million. Domestic mutual funds were allocated a total of $340 million in shares.

The IPO reflects ongoing enthusiasm for India's capital markets, with 260 companies raising over $9 billion thus far in 2024, surpassing last year's total of $7.42 billion.

Hyundai will not issue new shares; its South Korean parent will sell up to 17.5% of its stake in the wholly-owned unit, valued at up to $19 billion. At this valuation, Hyundai India will account for around 40% of its parent company’s market cap.

The official filings indicate 142,194,700 shares are on offer with a price band of 1,865 to 1,960 rupees. This listing marks Hyundai's first foray outside the South Korean market.

Retail and other investors can place orders from Tuesday to Thursday, following the anchor investors' commitments. The stock is set to commence trading in Mumbai on Oct. 22.

Hyundai India's IPO is poised to surpass the record previously set by Life Insurance Corporation of India in 2022, which raised $2.5 billion. It will also be the second-largest IPO globally this year after Lineage Inc’s $5.1 billion U.S. IPO in July.

Consumer Preferences

With an SUV-focused product lineup, Hyundai aims to leverage consumer preferences for larger vehicles and enhanced safety features. Analysts suggest this strategy should aid Hyundai India in gaining market share and progressing ahead of the competition.

Anchor investors are anticipated to reap long-term value as Hyundai Motor fortifies its presence in the Indian market. Plans for a 250,000 vehicle expansion by December 2025 promise significant growth opportunities for anchor investors, according to Arun Kejriwal, founder of Kejriwal Research.

Shin Yoon-chul, an analyst at Kiwoom Securities, noted the IPO's timing coincides with strong performance in the auto sector on the Indian stock market. Funds raised will bolster Hyundai's investment capacity and help close the market share gap with Maruti Suzuki, India's largest player. Additionally, Hyundai plans to launch its first India-made electric vehicle in early 2024 and introduce two gasoline models tailored for the market by 2026.