Hyundai files for 1st overseas unit IPO in India: reports

Hyundai Motor Co.'s Indian unit filed for an initial public offering with the Securities and Exchange Board of India on Saturday to raise up to $3 billion, according to media reports, in what would become the first IPO of its overseas operations.

The proposed stock market listing is expected to be India's biggest-ever IPO as the automotive group, which includes Kia Corp., plans to invest $4 billion in its Indian operations over the next 10 years.  
 
The South Korean carmaker is seeking to float up to a 17.5% of stake in its wholly owned unit, or 142 million shares, which will not involve new share issues.

The prospectus filed by the carmaker gave no details of the IPO’s pricing, or the company’s valuation, Business Times, a Singaporean newspaper, reported on Saturday.

However, Hyundai Motor India’s IPO is expected to eclipse the $2.5 billion offering by Life Insurance Corporation of India in 2022. It will also make the carmaker the country’s first carmaker to go public in two decades since Maruti Suzuki’s IPO in 2003.

In February, Reuters reported that Hyundai Motor India could be valued at $2.5 billion-$3 billion in the upcoming IPO. Its stock market debut is expected to take place as early as September or October of this year.

Hyundai Motor India is the second-biggest car maker behind Maruti Suzuki in the world's No. 3 automobile market that serves as its Southeast Asian hub.

REDUCING RELIANCE ON PARENT FIRM

Analysts said the upcoming IPO will put Hyundai Motor India at an advantage over Maruti by financing its investments on its own without depending on its parent group.

Hyundai Motor is aiming to increase its annual production capacity to 1 million units in India this year. Including output from its sibling Kia Corp., their total capacity in India will jump to 1.5 million units next year.

The automotive group said it sold 857,000 units of cars in India in 2023, accounting for 21% of the 4.1 million units sold in the country that year. In 2022, it sold 807,000 units there. 

Hyundai set up its Indian arm in 1996 and began mass production of the compact hatchback Santro, its first model tailored to India, in 1998.

It operates two plants in Chennai, Tamil Nadu and one in Talegaon, Maharashtra. Its sister company Kia Corp. has a manufacturing base in Anantapur, Andhra Pradesh.

The application for an IPO came after Hyundai acquired General Motor’s Talegaon plant in the western state of Maharashtra in 2023. It plans to use the Talegaon factory as a manufacturing base for production of its India-dedicated EVs.

LS Securities analyst Kim Gwang-soo said that Hyundai Motor India's IPO will give a boost to its parent company's enterprise and asset values, despite the Indian operations accounting for a mere 8% of its net profit.

INVESTMENT PLANS

Last year, Hyundai announced a plan to invest 200 billion rupees ($2.45 billion) in Chennai, Tamil Nadu over the next decade. It will churn out five electric vehicle models from the factory by 2030, starting with an electric sports utility vehicle around the end of this year.

In January of this year, Hyundai signed a memorandum of understanding with the state of Maharashtra to invest 70 billion Indian rupees ($845 million) to expand and upgrade its Indian car manufacturing plant in Talegaon.

Hyundai said it would set up a battery pack assembly plant in Chennai and install 485 EV charging stations across India by 2030.

In total, it plans to invest $4 billion into India over the next 10 years.

MARKET CAPITALIZATION

In the Indian stock market, Maruti Suzuki ranks 13th with a market capitalization of $48.35 billion, followed by Tata Motors ranked 17th with a market cap of $43.62 billion. Mahindra & Mahindra comes in 20th with $42 billion in market value.

Hyundai’s market cap is estimated to reach $30 billion, according to data provider Companies Market Cap.

Indian stock market capitalization stood at $5.20 trillion as of Friday’s close, according to Business Standard, an English-language newspaper published in the country.

The figure is higher than Hong Kong’s $5.17 trillion. In terms of market cap, India is now the world’s fourth-largest stock market after the US, China and Japan.

By comparison, South Korea’s stock market cap came in at $1.6 trillion.

Indian economy is projected to grow 6.1% this year from the year prior, according to the International Monetary Fund (IMF). That is more than twice as much as the average growth estimate of 2.7% for the IMF member countries.

Last year, 238 companies raised a total of $7.35 billion from IPOs in India, the largest ever figure for the local bourse, according to CNBC.

Since the start of this year, 130 companies have filed for IPOs in the country as of June 12 to offer 313 billion rupees ($3.7 billion) worth of shares.

Write to Jung-Eun Shin and Hyeon-woo Oh at newyearis@hankyung.com

Yeonhee Kim edited this article.