Why Hyundai picked India for file $3.3 billion IPO – DW – 10/15/2024 | EUROtoday

Why has Hyundai launched an IPO in India?

The South Korean auto big Hyundai launched its preliminary public providing (IPO) on Tuesday, billed as India’s largest inventory market debut, price about $3.3 billion (€3.05 billion).

The first carmaker to go public in India since Maruti Suzuki in 2003, Hyundai is providing 142 million shares on the market, which represents about 17.5% of the full shares of its Indian arm.

Retail bidding, priced at 1,865 rupees ($22.20/€20.35) to 1,960 rupees per share, is anticipated to proceed till Thursday. The inventory market itemizing is anticipated to start on October 22.

Already India’s second-largest carmaker by gross sales, Hyundai is eager to construct on the benefit gained by its early entry into the nationwide market in 1996. Last 12 months, Hyundai bought over 605,000 automobiles in India, a 9% improve from the earlier 12 months. It hopes the extra funds will assist shut the market share hole with chief Maruti Suzuki.

India already has the third-largest auto sector on this planet — and it’s rising quick. Last 12 months, greater than 4.1 million automobiles had been bought. The auto sector is a serious pillar of the financial system and the nation’s massive, rising shopper base and urbanization charge, together with comparatively low manufacturing prices, make it a really perfect location for Hyundai to fabricate and promote its automobiles.

India’s authorities is eager to spice up home electrical car manufacturing, which aligns with the Korean carmaker’s technique.

Hyundai additionally sees India as a vital various to China and Russia, the place gross sales have dropped due to geopolitical points. The South Asian nation affords a extra steady surroundings to its friends.

How does the IPO evaluate with others in India?

Globally, Hyundai’s IPO would be the second largest this 12 months when it comes to cash raised, following July’s itemizing by Lineage Logistics, the world’s largest cold-storage agency, price $5.1 billion.

Hyundai’s itemizing will eclipse the 2022 IPO of the state-run Life Insurance Corporation of India, during which the federal government bought a 3.5% stake and raised $2.7 billion.

Other prime home listings lately embrace fintech big Paytm, whose IPO was price $2.2 billion in November 2021, and Coal India, which went public in 2010 at a worth of $1.8 billion.

India’s inventory market has been booming over the previous 4 years, rising by 210% between April 2020 — throughout the first pandemic lockdown — and final month. On Tuesday, the SENSEX, the index of the Top 30 shares on the Bombay Stock Exchange, was buying and selling at 81,820.

India just lately pipped Hong Kong to turn into the fourth-largest inventory market on this planet.

Big traders snap up shares

In an indication of the recognition of Hyundai’s itemizing, almost $1 billion in shares had been snapped up by institutional traders on Monday.

The authorities of Singapore and BlackRock, the enormous US funding agency, picked up stakes price a complete of $77.3 million, whereas Fidelity purchased shares price $76.5 million and home mutual funds had been allotted shares price a complete of $340 million.

Retail traders snapped up 18% of the out there shares by the tip of Tuesday, the primary day of the general public supply, media reported.

What are Hyundai’s plans in India?

India’s auto market has quickly turn into ultracompetitive, and smaller home rivals Tata Motors and Mahindra & Mahindra have eaten into Hyundai’s market share.

“India is one of the most exciting auto markets in the world,” Unsoo Kim, managing director of Hyundai’s Indian unit, informed a information briefing in Mumbai final week. “[The] IPO will ensure that Hyundai Motor India is even more dedicated to succeed in India.”

Hyundai plans to make use of proceeds from the IPO to boost its analysis efforts and develop new vehicles, searching for to remodel the nation right into a manufacturing hub for different international locations within the Global South.

Hyundai already delivers its India-made automobiles to greater than 90 international locations.

“We intend to become a global manufacturing hub for Hyundai for the emerging markets,” Tarun Garg, chief working officer of Hyundai India, informed the Reuters information company. “In [the] next 3-4 years, [a] 30% increase in production will improve our domestic and export volumes.”

The Korean automaker has already invested $5 billion within the nation and plans to pump in one other $4 billion over the following decade to assist make its Indian operations a key plank of its electrical car (EV) manufacturing, in addition to constructing EV infrastructure reminiscent of charging stations and a battery meeting plant.

Hyundai presently has one manufacturing plant in India for native gross sales and exports. Production at a second plant is anticipated to start operations in 2025, which is able to assist take the agency’s whole capability in India to past 1 million items a 12 months.

Edited by: Rob Mudge