Biggest Indian IPO Launch In October? Hyundai Motor Gets SEBI Nod For $3 Billion Public Issue; Reports

South Korean auto giant Hyundai Motor Co's Indian subsidiary, Hyundai Motor India Limited (HMIL), has gotten the market regulators with its proposed Initial Public Offering (IPO) valued at approximately $3 billion. This mega IPO recently received approval from India's market regulator, SEBI, following the submission of its draft papers in June, according to a report by Moneycontrol. If the listing plans materialize, this IPO will become the largest in Indian corporate history, surpassing the record set by state-owned LIC's $2.7 billion listing in 2022.

The long-anticipated IPO has taken a step forward, with SEBI providing its final observations, paving the way for the offering to likely hit the market in October. This development marks another chapter for Hyundai Motor India, the country's second-largest carmaker in FY24 in terms of passenger sales volumes, just behind market leader Maruti Suzuki.

Hyundai Motor India had initially filed its Draft Red Herring Prospectus (DRHP) on June 15, targeting a valuation between $18 billion and $20 billion. The IPO is structured as a pure Offer for Sale (OFS), wherein up to 14,21,94,700 equity shares with a face value of Rs 10 each will be offered by the promoter-selling shareholder.

The DRHP stated, "The objects of the offer are to carry out the Offer for Sale of up to 142,194,700 Equity Shares of the face value of Rs 10 each by the Promoter Selling Shareholder and to achieve the benefits of listing the Equity Shares on the Stock Exchanges. Further, our Company expects that listing of the Equity Shares will enhance our visibility and brand image and provide liquidity and a public market for the Equity Shares in India."

Several global and domestic financial institutions are advising on this IPO. The list includes investment banking heavyweights such as Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital, and Morgan Stanley.

Moreover, leading law firms have been roped in to manage the legal intricacies of the IPO. Shardul Amarchand Mangaldas is acting as the company counsel, while Cyril Amarchand Mangaldas represents the banks involved in the transaction. International law firm Latham and Watkins is handling the overseas legal matters.

Hyundai Motor India has established itself as a dominant player in the Indian automotive market, consistently ranking as the second-largest passenger car manufacturer in the country since fiscal 2009 in terms of domestic sales volumes. The company offers a diverse portfolio of 13 models spanning various segments, including sedans, hatchbacks, sports utility vehicles (SUVs), and battery electric vehicles (BEVs).

In addition to its robust domestic presence, Hyundai Motor India has been a powerhouse in exports. According to the company's DRHP, it has been the largest exporter of passenger vehicles from fiscal 2005 to the first 11 months of fiscal 2024, boasting the highest cumulative number of passenger vehicle exports for this period. Hyundai's export operations have been pivotal in expanding its reach and establishing the brand as a global automotive leader.

Since its inception in 1998 and up to March 31, 2024, Hyundai Motor India has cumulatively sold nearly 12 million passenger vehicles in India and through exports, demonstrating its massive footprint in the automotive industry. Impressively, in the calendar year 2023, Hyundai Motor India was among the top three contributors to Hyundai Motor Co's (HMC) global sales volumes. Its contribution to HMC's overall sales volumes has increased significantly from 15.48% in 2018 to 18.19% in 2023.

Hyundai's upcoming IPO not only marks a significant milestone for the company but also places it in direct comparison with its chief rival, Maruti Suzuki India. Currently, Maruti Suzuki enjoys a market capitalization of around Rs 4,00,000 crore (approximately $48 billion) and has seen its share price rise by 20.25% over the last year.

However, Hyundai's diverse product portfolio and strong export capabilities position it as a formidable competitor. The successful launch of its IPO will further enhance Hyundai's brand visibility and solidify its status as a key player in the Indian automotive sector.

If Hyundai Motor India's IPO proceeds as planned, it will set a new benchmark as India's largest-ever public issue, surpassing the Rs 21,000 crore ($2.7 billion) raised by LIC in 2022. The timing of this IPO is particularly significant, given the current enthusiasm for auto sector stocks among retail and institutional investors, driven by strong growth prospects and an increasing shift towards electric vehicles.

Analysts believe that Hyundai's IPO will be a landmark event, offering investors a unique opportunity to tap into the growth potential of India's booming automotive industry. Hyundai's strong track record, comprehensive product lineup, and export success provide a compelling investment narrative, making this IPO one of the most anticipated offerings in recent years.