Hyundai Motor India Limited (HMIL), the Indian arm of South Korean auto giant Hyundai Motor Co., is poised to launch India’s largest-ever initial public offering (IPO), potentially raising around $3 billion. This landmark move follows the green light from the Securities and Exchange Board of India (Sebi), marking a significant milestone in India’s financial market.
Sebi Approval Paves the Way
After filing its Draft Red Herring Prospectus (DRHP) in June 2024, Hyundai Motor India received the final observations from Sebi, setting the stage for the anticipated IPO launch in October. According to sources familiar with the matter, this IPO will surpass the previous record set by the state-owned Life Insurance Corporation (LIC) in 2022, which raised $2.7 billion.
“The regulator’s final observations have come in. This record-breaking IPO is likely to be launched in October,” revealed one of the sources on the condition of anonymity.
If the IPO proceeds as planned, it will not only be a significant financial event for Hyundai but also a historic moment for India Inc., reflecting the growing influence of global companies in the Indian market.
The Offer for Sale (OFS) Structure
The IPO is structured as a pure Offer for Sale (OFS) by the promoter, targeting a valuation of around $18 billion to $20 billion. The DRHP outlines the primary objectives of the offer: to execute the OFS of up to 142,194,700 equity shares, each with a face value of Rs 10, and to enhance the company’s visibility, brand image, and liquidity in the Indian market.
Hyundai’s IPO is expected to attract substantial interest from investors, given the company’s robust performance in the Indian automotive sector. With a diversified portfolio that includes sedans, hatchbacks, SUVs, and battery electric vehicles, Hyundai has solidified its position as a leading player in India’s passenger vehicle market.
Hyundai’s Market Dominance
Hyundai Motor India has consistently been the second-largest automaker in India, trailing only Maruti Suzuki in passenger sales volumes. In FY24, the company maintained its strong market presence, continuing to build on its legacy since it first entered the Indian market in 1998. The company’s DRHP highlights its achievements, stating, “We have also been India’s largest exporter of passenger vehicles from Fiscal 2005 to the first 11 months of Fiscal 2024, having exported the highest cumulative number of passenger vehicles for the same period.”
As of March 31, 2024, Hyundai Motor India had cumulatively sold nearly 12 million passenger vehicles in India and through exports. In 2023, Hyundai India was among the top three contributors to Hyundai Motor Company’s global sales volumes, demonstrating the significant role India plays in the automaker’s overall strategy.
Strategic Advisors and Legal Counsel
A consortium of top-tier financial and legal advisors is guiding Hyundai Motor India through this landmark IPO. The transaction is being advised by Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital, and Morgan Stanley, with law firm Shardul Amarchand Mangaldas serving as the company counsel. Cyril Amarchand Mangaldas and Latham & Watkins are acting as counsel for the banks and international advisors, respectively.
This high-profile deal has been in the making for several months, with Hyundai first engaging Citi, JP Morgan, and HSBC Securities in February 2024 to spearhead the IPO preparations. The move is seen as a strategic step for Hyundai to capitalize on its strong market position and to leverage the growing interest in India’s automotive sector.
Looking Ahead
As Hyundai Motor India prepares for its record-breaking IPO, the company’s prospects look promising. The IPO not only represents a significant financial milestone for Hyundai but also underscores the increasing importance of India as a key market for global automakers. With the launch expected in October, all eyes will be on Hyundai as it embarks on this historic financial journey. The success of this IPO could set the stage for future listings and solidify India’s position as a major hub for automotive innovation and investment.
(With inputs from agencies)
