Hyundai Motor Could be India's Biggest-Ever Initial Public Offering Worth $3 Billion: Report Hyundai Motor expects a potential $3 billion as an Initial Public Offering (IPO), surpassing the previous record of $2.46 billion raised by India's life insurance.
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Although Hyundai boasts a robust cash reserve at its parent company, the proposed India Initial Public Offering (IPO) aims to raise extra funds. Last week, Hyundai Motor's Indian division initiated the process for a landmark listing, potentially setting the stage for the country's largest IPO. These funds are expected to be allocated in part to boost shareholder value via increased dividends.
Hyundai, which holds the title of India's second-largest automaker after Maruti Suzuki, is charting a unique course for its IPO by not releasing new shares. Instead, the South Korean parent company will pare down its ownership, offering up to 17.5 per cent of its fully-owned Indian arm to retail and institutional investors through an "offer for sale" approach.
Talking to Reuters, analyst Song Sun-jae with Hana Securities said, "Investors are betting on Hyundai Motor's growth in the Indian market, one of Hyundai Motor's four biggest revenue generating markets along with the United States, South Korea and western Europe. With the India IPO, Hyundai Motor could better accelerate its plans for the India market, such as getting dibs on the electric vehicle (EV) market there ahead of their competitors by producing EVs in the country by adjusting its existing production site."
The preliminary prospectus submitted by Hyundai have no specifics of the IPO's pricing and the firm's estimated worth. However, Reuters report that Hyundai is targeting a fundraising haul of about $2.5-$3 billion, eyeing a valuation that could soar as high as $30 billion. Subsequently, the shares of Hyundai Motor in Seoul rose as much as 6.3 per cent on Monday to 285,000 won ($206.03), and closed up 3.9 per cent, a record high close which lifted its market capitalization to 58.3 trillion won.
Hyundai's IPO in India, one of the globe's most rapidly expanding automotive markets, marks a strategic move to bolster its market value. This decision aligns with the South Korean government's push for companies to seek foreign listings, aiming to elevate valuations and return more cash to shareholders. By choosing India, Hyundai not only underscores its commitment to scaling its operations in the country but also paves the way for other international firms. This precedent demonstrates how foreign companies can broaden their investor base and enhance valuations through global market listings.
