Hyundai India files DRHP for $3 billion IPO

18 Jun 2024 , 12:32 PM

Hyundai Motor India Limited (HMIL), the Indian arm of South Korean auto giant Hyundai Motor Co, has filed draft papers with the Securities and Exchange Board of India (SEBI) to raise approximately $3 billion through an initial public offering (IPO).

If successful, this IPO will be India’s largest ever, surpassing the previous record held by the state-owned Life Insurance Corporation (LIC), which raised $2.7 billion in 2022. This IPO will be a pure offer for sale (OFS) by the promoter, involving the sale of up to 142,194,700 equity shares with a face value of ₹10 each.

According to the draft red herring prospectus (DRHP) filed on June 14, the primary objectives of the offer are:

• To carry out the offer for sale by the promoter selling shareholder.
• To achieve the benefits of listing the equity shares on stock exchanges.

The company expects that listing the shares will enhance its visibility, improve its brand image, and provide liquidity and a public market for its equity shares in India.

Depending on market conditions and investor interest during the roadshows, Hyundai Motor India may consider a pre-IPO round as a de-risking strategy.

The transaction is being advised by several investment banks, including Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital, and Morgan Stanley. The law firm Shardul Amarchand Mangaldas is acting as the company counsel, while Latham and Watkins are serving as the international counsel.

Hyundai Motor India is the second-largest carmaker in India after Maruti Suzuki in terms of passenger sales volumes. For FY23, Hyundai Motor India reported a revenue of ₹60,000 Crore and profits of ₹4,653 Crore, making it the most profitable non-listed car manufacturer in the country. In 2023, India accounted for approximately 13% of Hyundai’s global sales, with popular models including the i20, Verna, Creta, Aura, and Tucson. The company achieved its highest-ever domestic sales in 2023, surpassing the six-lakh unit mark.

The share price of rival Maruti Suzuki India has risen by 24.35% in the last six months, with a market capitalization of around ₹4,00,000 Crore (approximately $48 billion). Hyundai’s strong financial performance and significant market presence underscore its potential as it prepares for this landmark IPO.