Get set for India's biggest ever IPO as Sebi greenlights Hyundai Motor Co's issue of around $3 bn; launch likely in October

Hyundai Motor India IPO

South Korean auto giant Hyundai Motor Co's Indian arm Hyundai Motor India Limited is one step closer to launching its proposed initial public offer of around $3 billion, with market regulator Sebi giving the go ahead for the mega issue post the filing of draft papers in June, multiple persons in the know told Moneycontrol on the condition of anonymity.

"The regulator's final observations have come in. This record breaking IPO is likely to be launched in October," said one of the persons above.

Moneycontrol has sent an email query and could not elicit an immediate comment from Hyundai Korea and will update this article as soon as it hears from the firm.

If the listing plans fructify, this deal, a pure OFS or offer for sale by the promoter, would be India Inc's biggest-ever IPO and beat the earlier record set by state-owned LIC's $2.7 bn listing in 2022.

On June 15, the Indian unit of the auto giant filed its draft red herring prospectus (DRHP) with the regulator, targeting a valuation of around $18 billion-$20 billion.

"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," said the DRHP. "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."

Hyundai Motor India Limited was India's second largest carmaker after Maruti Suzuki in FY24 in terms of passenger sales volumes.

The share price of rival Maruti Suzuki has risen by 20.25 percent in the last one year. The market leader has a market cap of around Rs 4,00,000 crore or nearly $48 billion.

Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital and Morgan Stanley are the i-banks advising on the transaction with law firm Shardul Amarchand Mangaldas acting as the company counsel, Cyril Amarchand Mangaldas as the banks' counsel and Latham and Watkins acting as the international counsel.

On May 24, Moneycontrol had reported that the filing of draft papers by Hyundai's India unit was expected by the end of June and the firm was looking to raise between $2.5 billion to $3 billion.

Citi, JP Morgan and HSBC Securities had been engaged previously for the high-profile deal, Moneycontrol first reported on February 9.

A closer look at Hyundai Motor Co's Indian operations

The firm sells four-wheeler passenger vehicles and has a portfolio of 13 models across
multiple passenger vehicle segments by body type such as sedans, hatchbacks, sports -utility vehicles and battery electric vehicles. It also manufactures parts, such as transmissions and engines.

According to its DRHP, the automaker has been the second largest auto OEM in the Indian passenger vehicles market since Fiscal 2009 (in terms of domestic sales volumes).

"We have also been India’s largest exporter of passenger vehicles from Fiscal 2005 to the first 11 months of Fiscal 2024, having exported the highest cumulative number of passenger vehicles for the same period, according to the CRISIL Report. Since 1998 and up to March 31, 2024, we have cumulatively sold nearly 12 million passenger vehicles in India and through exports. In CY2023, we were among the top three contributors to HMC’s global sales volumes, and our contribution to HMC’s sales volumes has increased from 15.48% in CY2018 to 18.19% in CY2023," its DRHP added.