Hyundai Motor Co.’s Indian unit has filed for an initial public offering (IPO) with the Securities and Exchange Board of India, aiming to raise up to $3 billion. This move, reported on Saturday, marks Hyundai’s first IPO for its overseas operations and is set to become India’s biggest-ever IPO.
The South Korean automotive giant plans to float up to 17.5% of its wholly owned Indian unit, equivalent to 142 million shares. The proposed listing, expected to take place between September and October, will not involve the issuance of new shares.
The IPO is anticipated to surpass the $2.5 billion offering by Life Insurance Corporation of India in 2022. It will also make Hyundai Motor India the first carmaker to go public in India since Maruti Suzuki’s IPO in 2003.
Hyundai Motor India, the second-largest carmaker in India, serves as a crucial hub for the company’s Southeast Asian operations. The company plans to increase its annual production capacity to 1 million units this year, with a combined capacity of 1.5 million units from both Hyundai and its sibling company, Kia Corp., by next year.
In 2023, Hyundai sold 857,000 units in India, accounting for 21% of the 4.1 million vehicles sold in the country. This is an increase from 807,000 units sold in 2022. The Indian arm, established in 1996, began production with the compact hatchback Santro in 1998 and operates plants in Chennai, Tamil Nadu, and Talegaon, Maharashtra.
The IPO follows Hyundai’s acquisition of General Motors’ Talegaon plant, which will be used for producing India-specific electric vehicles (EVs). Hyundai has committed to investing 200 billion rupees ($2.45 billion) in Chennai over the next decade and plans to launch five EV models by 2030.
Additionally, Hyundai signed a memorandum of understanding with Maharashtra to invest 70 billion rupees ($845 million) to expand its Talegaon plant. Plans include setting up a battery pack assembly plant in Chennai and installing 485 EV charging stations across India by 2030.
Analysts believe the IPO will provide Hyundai Motor India with a significant advantage over its competitor Maruti Suzuki by enabling self-financing for its investments. Despite contributing only 8% to Hyundai’s net profit, the Indian unit’s public listing is expected to boost the parent company’s enterprise and asset values.
In the Indian stock market, Maruti Suzuki ranks 13th with a market capitalization of $48.35 billion, followed by Tata Motors at $43.62 billion and Mahindra & Mahindra at $42 billion. Hyundai’s market cap is estimated to reach $30 billion, making it a significant player in the world’s fourth-largest stock market, valued at $5.20 trillion.
The Indian economy, projected to grow 6.1% this year, remains an attractive market for IPOs, with 130 companies filing for IPOs to raise $3.7 billion as of mid-June. This strong economic growth and investor interest are likely to support Hyundai Motor India’s ambitious plans and market expansion.
